Form 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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þ |
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Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the fiscal year ended: December 31, 2010
or
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o |
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission File Number: 000-54133
CENTURY NEXT FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
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Louisiana |
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27-2851432 |
(State or Other Jurisdiction of
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(I.R.S. Employer |
Incorporation or Organization)
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Identification Number) |
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505 North Vienna Street, Ruston, Louisiana |
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71270 |
(Address of Principal Executive Offices)
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(Zip Code) |
Registrants telephone number, including area code: (318) 255-3733
Securities registered pursuant to Section 12(b) of the Act: none
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. YES o NO þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. YES o NO þ
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2)
has been subject to such filing requirements for the past 90 days. YES þ NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). YES o
NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of the Registrants knowledge in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company þ |
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). YES o NO þ
The aggregate market value of the 805,000 shares of the Registrants common stock held by
non-affiliates, based upon the closing price of $12.50 for the common stock on October 1, 2010, the
first trading day following our initial public offering, as reported by the OTC Bulletin Board, was
approximately $10.1 million. Shares of common stock held by the registrants executive officers,
directors and certain benefit plans have been excluded since such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a conclusive determination
for other purposes.
Number of shares of common stock outstanding as of March 29, 2011: 1,058,000
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the 2011 Annual Meeting of Shareholders are
incorporated by reference into Part III, Items 10-14 of this Form 10-K.
CENTURY NEXT FINANCIAL CORPORATION
2010 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
Forward-Looking Statements
This Annual Report on Form 10-K contains certain forward looking statements (as defined in the
Securities Exchange Act of 1934 and the regulations thereunder). Forward looking statements are
not historical facts but instead represent only the beliefs, expectations or opinions of Century
Next Financial Corporation and its management regarding future events, many of which, by their
nature, are inherently uncertain. Forward looking statements may be identified by the use of such
words as: believe, expect, anticipate, intend, plan, estimate, or words of similar
meaning, or future or conditional terms such as will, would, should, could, may,
likely, probably, or possibly. Forward looking statements include, but are not limited to,
financial projections and estimates and their underlying assumptions; statements regarding plans,
objectives and expectations with respect to future operations, products and services; and
statements regarding future performance. Such statements are subject to certain risks,
uncertainties and assumption, many of which are difficult to predict and generally are beyond the
control of Century Next Financial Corporation. and its management, that could cause actual results
to differ materially from those expressed in, or implied or projected by, forward looking
statements. The following factors, among others, could cause actual results to differ materially
from the anticipated results or other expectations expressed in the forward looking statements: (1)
economic and competitive conditions which could affect the volume of loan originations, deposit
flows and real estate values; (2) the levels of non-interest income and expense and the amount of
loan losses; (3) competitive pressure among depository institutions increasing significantly; (4)
changes in the interest rate environment causing reduced interest margins; (5) general economic
conditions, either nationally or in the markets in which Century Next Financial Corporation is or
will be doing business, being less favorable than expected;(6) political and social unrest,
including acts of war or terrorism; or (7) legislation or changes in regulatory requirements
adversely affecting the business in which Century Next Financial Corporation will be engaged.
Century Next Financial Corporation undertakes no obligation to update these forward looking
statements to reflect events or circumstances that occur after the date on which such statements
were made.
As used in this report, unless the context otherwise requires, the terms we, our, us,
Century Next Financial, or the Company refer to Century Next Financial Corporation, a Louisiana
corporation, and the term the Bank refers to Bank of Ruston, a federally chartered savings bank
and wholly owned subsidiary of the Company. In addition, unless the context otherwise requires,
references to the operations of the Company include the operations of the Bank.
PART I
General. Century Next Financial was organized by Bank of Ruston in June 2010 to facilitate
the conversion of the Bank from the mutual to the stock form of ownership. Financial statements
prior to the conversion, which was completed on September 30, 2010, are the financial statements of
the Bank. A total of 1,058,000 shares of common stock of the Company were sold at $10 per share in
the subscription and community offerings through which the Company received net proceeds of
approximately $9.8 million, net of offering costs of approximately $748,000. The Company is a
savings and loan holding company regulated by the Office of Thrift Supervision. Pursuant to
recently-enacted legislation, after July 21, 2011, the Companys primary federal regulator will be
the Board of Governors of the Federal Reserve System.
The Bank provides a variety of financial services primarily to individual customers through
its main office and one branch in Ruston, Louisiana. The Banks primary deposit products are
checking accounts, money market accounts, interest bearing savings and certificates of deposit.
Its primary lending products are residential mortgage loans. The Bank provides services to
customers in the Ruston and surrounding areas.
The Companys operations are subject to customary business risks associated with activities of
a financial institution holding company. Some of those risks include competition from other
financial institutions and changes in economic conditions, interest rates and regulatory
requirements.
1
Market Area and Competition
Bank of Rustons two banking offices are located in Lincoln Parish in central northern
Louisiana and our market area includes the contiguous parishes of Claiborne, Bienville, Ouachita,
Union and Jackson Parishes. We face significant competition in originating loans and attracting
deposits. This competition stems primarily from commercial banks and mortgage-banking companies.
Within our market area, eleven other banks, and credit unions are operating. Many of the financial
service providers operating in our market area are significantly larger, and have greater financial
resources, than us. We face additional competition for deposits from short-term money market funds
and other corporate and government securities funds, mutual funds and from other non-depository
financial institutions such as brokerage firms and insurance companies.
Lending Activities
General. At December 31, 2010, the Companys net loan portfolio amounted to $71.6 million,
representing approximately 73.0% of its total assets at that date. The Companys principal lending
activity is the origination of one- to four-family residential loans and, to a lesser extent,
commercial real estate loans. At December 31, 2010, one- to four-family residential loans amounted
to $36.3 million, or 50.5% of its total loan portfolio. At December 31, 2010, commercial real
estate loans totaled $12.9 million, or 17.9% of the total loan portfolio. Land loans totaled $6.9
million, or 9.6% of the total loan portfolio at December 31, 2010. Commercial business loans at
December 31, 2010, totaled $6.0 million, or 8.3% of the total loan portfolio. Consumer non-real
estate loans totaled $5.8 million, or 8.1% of the total loan portfolio at December 31, 2010.
Multi-family residential and home equity lines of credit totaled $2.0 million and $1.2 million, or
2.8% and 1.7%, respectively, of the total loan portfolio at December 31, 2010.
The types of loans that the Company may originate are subject to federal and state laws and
regulations. Interest rates charged on loans are affected principally by the demand for such loans,
the supply of money available for lending purposes and the rates offered by our competitors. These
factors are, in turn, affected by general and economic conditions, the monetary policy of the
federal government, including the Federal Reserve Board, legislative and tax policies, and
governmental budgetary matters.
As a federally-chartered savings bank, Bank of Ruston is subject to a regulatory loan to one
borrower limit. As of December 31, 2010, Bank of Rustons loans to one borrower limit was $2.2
million. At December 31, 2010, Bank of Rustons five largest loans or groups of loans-to-one
borrower, including related entities, aggregated $1.4 million, $1.4 million, $1.1 million, $1.1
million and $1.0 million. Each of Bank of Rustons five largest loans or groups of loans was
performing in accordance with its terms at December 31, 2010.
Loan Portfolio Composition. The following table shows the composition of our loan portfolio
by type of loan at the dates indicated.
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December 31, |
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2010 |
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2009 |
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Amount |
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% |
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Amount |
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% |
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(Dollars in thousands) |
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Real estate loans: |
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One- to four-family residential |
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$ |
36,267 |
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50.50 |
% |
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$ |
36,099 |
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53.74 |
% |
Commercial real estate and lines of credit |
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12,853 |
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17.90 |
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12,670 |
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18.86 |
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Multi-family |
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2,027 |
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2.82 |
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2,247 |
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3.35 |
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Land |
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6,891 |
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9.60 |
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4,292 |
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6.39 |
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Residential construction |
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777 |
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1.08 |
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1,365 |
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2.03 |
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Total real estate loans |
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58,815 |
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81.90 |
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56,673 |
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84.37 |
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Other loans: |
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Home equity line of credit |
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1,250 |
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1.74 |
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1,697 |
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2.53 |
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Consumer non-real estate loans |
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5,782 |
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8.05 |
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4,368 |
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6.50 |
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Commercial business loans |
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5,970 |
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8.31 |
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4,436 |
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6.60 |
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Total other loans |
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13,002 |
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18.10 |
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10,501 |
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15.63 |
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Total loans |
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$ |
71,817 |
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100.00 |
% |
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$ |
67,174 |
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100.00 |
% |
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Less: |
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Allowance for loan losses |
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204 |
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176 |
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Net loans |
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$ |
71,613 |
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$ |
66,998 |
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2
Origination of Loans. The Companys lending activities are subject to the written
underwriting standards and loan origination procedures established by the board of directors and
management. Loan originations are obtained through a variety of sources, primarily existing
customers as well as new customers obtained from referrals and local advertising and promotional
efforts. In addition, our business development officer actively solicits new loans throughout our
local market area. Written loan applications are taken by one of our loan officers or through
submission to the Bank of Ruston website and reviewed by a loan officer. The loan officer also
supervises the procurement of credit reports, appraisals and other documentation involved with a
loan. In accordance with its lending policy and loan underwriting standards, the Company obtains
independent outside appraisals on its loans or broker valuations for small loans, under $250,000,
or loans with low loan-to-value ratios. Borrowers must also obtain flood insurance policies when
the property is in a flood hazard area. We have entered into correspondent loan sales agreements
with several mortgage companies to purchase most of our long-term fixed rate owner-occupied
residential mortgage loan originations.
Our loan approval process is intended to assess the borrowers ability to repay the loan, the
viability of the loan and the value of the property that will secure the loan. Loans up to our
lending limit, which as of December 31, 2010 was $2.2 million, are approved by a management loan
committee currently consisting of Messrs. Benjamin Denny and James Hall. All loans in excess of
$5,000 are reviewed weekly by a loan committee of the Board of Directors, currently consisting of
Messrs. Denny, Ewing, Reneau and Rogers. The senior loan officer is an ex officio non-voting
member of the board loan committee and serves as chairman. Exceptions for loan limits must be
approved by management. Appraisals are obtained by a board approved appraiser.
The following table shows our total loans originated, purchased, sold and repaid during the
periods indicated. The loans sold, reflected in the table, all consist of one-to four-family
residential loans.
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Year Ended December 31, |
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2010 |
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2009 |
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(In thousands) |
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Loan originations: |
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One- to four-family residential |
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$ |
45,850 |
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$ |
44,126 |
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Commercial real estate and lines of credit |
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8,711 |
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4,213 |
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Multi-family |
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282 |
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5,040 |
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Land |
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9,130 |
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4,491 |
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Residential construction |
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2,196 |
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6,307 |
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Home equity lines of credit |
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513 |
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824 |
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Consumer non-real estate loans |
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6,264 |
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7,780 |
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Commercial business loans |
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7,563 |
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2,984 |
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Total loan originations |
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80,509 |
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75,765 |
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Loans purchased |
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Loans sold |
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25,629 |
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31,631 |
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Loan principal repayments |
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50,260 |
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38,392 |
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Total loans sold and principal repayments |
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75,889 |
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70,023 |
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Increase due to other items, net(1) |
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23 |
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29 |
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Net increase in total loans |
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$ |
4,643 |
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$ |
5,771 |
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(1) |
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Other items consist of loans in process and deferred fees. |
Although federal laws and regulations permit savings banks to originate and purchase
loans secured by real estate located throughout the United States, Bank of Ruston concentrates its
portfolio lending activity to its primary market area in Lincoln Parish, Louisiana and the
surrounding area.
3
Contractual Terms to Final Maturities. The following table shows the scheduled contractual
maturities of our loans as of December 31, 2010, before giving effect to the allowance for loan
losses. Demand loans, loans having no stated schedule of repayments and no stated maturity, and
overdrafts are reported as due in one year or less. The amounts shown below do not take into
account loan prepayments.
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Commercial |
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One- to |
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Real Estate |
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Home |
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Consumer |
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Commercial |
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Four-Family |
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and Lines of |
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Multi- |
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Residential |
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Equity Lines |
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Non-Real |
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Business |
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Residential |
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Credit |
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Family |
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Land |
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Construction |
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of Credit |
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Estate Loans |
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Loans |
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Total |
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(In Thousands) |
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Amounts due after
December 31, 2010 in: |
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One year or less |
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$ |
4,490 |
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$ |
2,714 |
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$ |
48 |
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$ |
3,808 |
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$ |
777 |
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$ |
219 |
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$ |
1,433 |
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$ |
3,792 |
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$ |
17,281 |
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After one year through two years |
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6,313 |
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3,070 |
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635 |
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490 |
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531 |
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925 |
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402 |
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12,366 |
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After two years through three years |
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8,372 |
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3,737 |
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226 |
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1,425 |
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500 |
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909 |
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903 |
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16,072 |
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After three years through five years |
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4,778 |
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2,201 |
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1,118 |
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956 |
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2,126 |
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763 |
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11,942 |
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After five years through ten years |
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1,972 |
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1,131 |
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117 |
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389 |
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110 |
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3,719 |
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After ten years through 15 years |
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1,716 |
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95 |
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1,811 |
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After 15 years |
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8,626 |
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8,626 |
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Total |
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$ |
36,267 |
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$ |
12,853 |
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$ |
2,027 |
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$ |
6,891 |
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$ |
777 |
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$ |
1,250 |
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$ |
5,782 |
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$ |
5,970 |
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$ |
71,817 |
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Scheduled contractual maturities of loans do not necessarily reflect the actual expected
term of the loan portfolio. The average life of mortgage loans is substantially less than their
average contractual terms because of prepayments. The average life of mortgage loans tends to
increase when current mortgage loan rates are higher than rates on existing mortgage loans and,
conversely, decrease when rates on current mortgage loans are lower than existing mortgage loan
rates (due to refinancing of fixed-rate loans at lower rates). Under the latter circumstance, the
weighted average yield on loans decreases as higher yielding loans are repaid or refinanced at
lower rates.
The following table shows the dollar amount of our loans at December 31, 2010, due after
December 31, 2011, as shown in the preceding table, which have fixed interest rates or which have
floating or adjustable interest rates.
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Floating or |
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Total at |
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Fixed-Rate |
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Adjustable-Rate |
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December 31, 2010 |
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(In thousands) |
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One- to four-family residential |
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$ |
31,777 |
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$ |
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$ |
31,777 |
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Commercial real estate and lines of credit |
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10,139 |
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10,139 |
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Multi-family |
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1,979 |
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1,979 |
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Land |
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3,083 |
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|
|
|
3,083 |
|
Residential construction |
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines of credit |
|
|
1,031 |
|
|
|
|
|
|
|
1,031 |
|
Consumer non-real estate loans |
|
|
4,349 |
|
|
|
|
|
|
|
4,349 |
|
Commercial business loans |
|
|
2,178 |
|
|
|
|
|
|
|
2,178 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
54,536 |
|
|
$ |
|
|
|
$ |
54,536 |
|
|
|
|
|
|
|
|
|
|
|
One- to Four-Family Residential Real Estate Loans. Our principal lending activity is
the origination of loans secured by single-family residences. At December 31, 2010, $36.3 million,
or 50.5%, of our total loan portfolio, before net items, consisted of one- to four-family
residential loans including both owner occupied and non-owner occupied properties.
It is our policy to originate loans as a first lien position on owner occupied residences up
to the Banks legal lending limit, which at December 31, 2010, was $2.2 million. We originate
fixed rate loans with terms of 15 or 30 years, the majority of which we sell into the secondary
market. The loans we originate for portfolio primarily consist of short-term fixed rate loans
with terms of three to five years and principal due at stated maturity. Such loans are amortizing
over 10 to 20 years and we generally expect that many such borrowers will refinance with Bank of
Ruston at the end of the term as we provide a streamlined refinancing process for the loan. Our
residential loan portfolio includes both owner occupied and non-owner occupied properties. All of
our non-owner occupied properties are financed with short-term 3 to 5 year loans and have
loan-to-value ratios of 75%. Mortgages without private mortgage insurance are generally limited
to 80%, or less, of the appraised value, or purchase price, of the secured real estate property.
Exceptions to this policy may be approved by the management loan committee.
4
Our guidelines for credit quality generally parallel the Federal National Mortgage
Corporation, commonly called Fannie Mae, and the Federal Home Loan Mortgage Corporation, commonly
called Freddie Mac, secondary market guidelines including income ratios and credit scores.
Commercial Real Estate and Lines of Credit. As of December 31, 2010, loans secured by
commercial real estate and commercial lines of credit, also secured by real estate, were $12.9
million, or 17.9% of total loans. Although commercial real estate and lines of credit are
generally considered to have greater credit risk than certain other types of loans, management
attempts to mitigate such risk by originating such loans in its local market area to
known borrowers. Our commercial real estate loans primarily consist of owner occupied business and
retail properties.
It is our current policy to lend in a first lien position on real property occupied as a
commercial business property or mixed use properties. As of December 31, 2010, our commercial
loans are limited to our legal lending limit of $2.2 million to individual borrowers and related
parties. Commercial real estate loans are limited to a maximum of 75% of the lesser of appraised
value or purchase price and primarily have fixed-rates and terms up to five years. We originate
few adjustable rate commercial real estate loans. If the collateral consists of special purpose
fixed assets, the maximum loan-to-value ratio is adjusted down based on the estimated cost to
convert the property to general use. Extended amortization schedules up to 20 years may be offered
if justified by the borrowers financial strength and/or low loan-to-value ratio. Rate commitments
are limited to 5 years with adjustments thereafter based on a negotiated rate or spread relative to
a market index. Commercial real estate loans are presented to the applicable loan committee for
review and approval, including analysis of the creditworthiness of the borrower.
Land Loans. As of December 31, 2010, land loans were $6.9 million, or 9.6% of the total loan
portfolio. Land loans include land which has been acquired for the purpose of development,
unimproved land and land acquired for agriculture or timber. Our loan policy provides for
loan-to-value ratios of 75% on improved land or land acquired for development and 65% for
unimproved land loans. Land loans are originated with fixed rates and terms up to five years.
Although land loans generally are considered to have greater credit risk than certain other types
of loans, we attempt to mitigate such risk by identifying secondary source of repayment for the
land loan other than the sale of the collateral. It is our practice to only originate a limited
amount of loans for speculative development to borrowers with whom we have a prior relationship.
Our policy requires land loans in excess of $250,000 to be reviewed on an annual basis with updated
documentation.
Multi-family Residential Loans. We originate multi-family residential loans in our local
market area primarily consisting of apartment rental properties. At December 31, 2010, our
multi-family residential loans totaled $2.0 million, or 2.8% of total loans. Multi-family
residential loans have loan-to-value ratios of 75% and terms up to five years. We require rental
and cash flow data sufficient to cover the loan repayment as well as identify a secondary source of
repayment, other than the sale of the collateral. Our policy requires multi-family residential
loans in excess of $250,000 to be reviewed on an annual basis with updated documentation.
Commercial Business Loans. The Company originates commercial business loans secured by
inventory and accounts receivable with terms up to five years. Our commercial business loans are
to various types of business, including manufacturing, retail and service industries. Loan-to-value
ratios for inventory range from 50% to 75% depending on the type and expected life. Accounts
receivable have loan-to-value ratios between 50% to 75% depending on the type of credit. At
December 31, 2010, $6.0 million, or 8.3% of our total loan portfolio consisted of commercial
business loans.
Residential Construction Loans. The Company originates residential construction loans with
loan-to-value ratios of 75% to 90%, or up to 95% with exceptions, with a firm commitment or takeout
letter from a mortgage lender which is sufficient to pay off the loan. A significant amount of our
residential construction loans are to the primary owners of the property, although to a lesser
extent, we also lend to builders in our local market area. Loans for the substantial renovation of
an existing home are underwritten and administered as construction loans. At December 31, 2010,
$800,000, or 1.1% of our total loan portfolio consisted of residential construction loans.
5
Home Equity Loans and Lines of Credit. The Company originates second mortgage
residential loans and home equity lines of credit to finance minor renovations and repairs as well
as for other consumer or investment purposes. Second mortgage loans and home equity lines of
credit are primarily extended when Bank of Ruston holds the first mortgage on the collateral and
are generally limited to loan-to-value ratios of 80% or less. At December 31, 2010, $1.2 million,
or 1.7% of our total loans consisted of home equity loans and lines of credit.
Consumer Non-real estate Loans. The Company originates consumer non-real estate loans that
have terms up to five years and generally higher interest rates than residential mortgage loans.
The consumer loans offered by Bank of Ruston consist of loans secured by deposit accounts with Bank
of Ruston, automobile loans and
other chattels such as boats, motor homes, trailers and consumer rubber tire tractors. Bank of
Ruston will make unsecured consumer loans to customers with an established history of performance
and capacity for repayment. At December 31, 2010, our consumer loans totaled $5.8 million, or 8.1%
of our total loan portfolio.
Loan Origination and Other Fees. In addition to interest earned on loans, the Company may
also receive loan origination fees or points for originating loans. Loan points are a percentage
of the principal amount of the mortgage loan and are charged to the borrower in connection with the
origination of the loan.
Asset Quality
General. The Companys collection procedures provide that when a loan is 30 and 60 days past
due, a notice is sent to the borrower. Borrowers who are 61 to 89 days delinquent will be sent a
letter advising that payments must be received by the last day of the month. For those who are 90
days delinquent, a demand letter is sent by Bank of Ruston giving them 10 days within which the
loan must be brought current. Customers who have not responded to the 90-day demand letter will
receive an attorneys letter advising them to bring the loan current. Late charges will be
assessed based on the number of days specified in the note beyond the due date. The board of
directors is notified of all delinquencies ninety days past due. In most cases, deficiencies are
cured promptly. While Bank of Ruston generally prefers to work with borrowers to resolve such
problems, Bank of Ruston will institute foreclosure or other collection proceedings when necessary
to minimize any potential loss.
Loans are placed on non-accrual status when management believes the probability of collection
of interest is doubtful. When a loan is placed on non-accrual status, previously accrued but
unpaid interest is deducted from interest income. We discontinue the accrual of interest income
when the loan becomes more than 90 days past due as to principal or interest.
Real estate and other assets acquired by Bank of Ruston as a result of foreclosure or by
deed-in-lieu of foreclosure are classified as real estate owned until sold. The Company did not
have any real estate owned at December 31, 2009 or 2010.
6
Delinquent Loans. The following table shows the delinquencies in our loan portfolio as of the
dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
30-89 |
|
|
90 or More |
|
|
30-89 |
|
|
90 or More |
|
|
|
Days Overdue |
|
|
Days Overdue |
|
|
Days Overdue |
|
|
Days Overdue |
|
|
|
Number |
|
|
Principal |
|
|
Number |
|
|
Principal |
|
|
Number |
|
|
Principal |
|
|
Number |
|
|
Principal |
|
|
|
of Loans |
|
|
Balance |
|
|
of Loans |
|
|
Balance |
|
|
of Loans |
|
|
Balance |
|
|
of Loans |
|
|
Balance |
|
|
|
(Dollars in thousands) |
|
One- to four-family residential |
|
|
7 |
|
|
$ |
557 |
|
|
|
7 |
|
|
$ |
447 |
|
|
|
6 |
|
|
$ |
304 |
|
|
|
2 |
|
|
$ |
205 |
|
Commercial real estate and lines of credit, multi-family and land |
|
|
5 |
|
|
|
474 |
|
|
|
3 |
|
|
|
317 |
|
|
|
1 |
|
|
|
95 |
|
|
|
1 |
|
|
|
4 |
|
Residential construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines of credit |
|
|
1 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer non-real estate loans |
|
|
10 |
|
|
|
76 |
|
|
|
2 |
|
|
|
10 |
|
|
|
14 |
|
|
|
99 |
|
|
|
2 |
|
|
|
11 |
|
Commercial business loans |
|
|
2 |
|
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
5 |
|
|
|
1 |
|
|
|
28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total delinquent loans |
|
|
25 |
|
|
$ |
1,223 |
|
|
|
12 |
|
|
$ |
774 |
|
|
|
22 |
|
|
$ |
503 |
|
|
|
6 |
|
|
$ |
248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinquent loans to total net loans |
|
|
|
|
|
|
1.71 |
% |
|
|
|
|
|
|
1.08 |
% |
|
|
|
|
|
|
0.75 |
% |
|
|
|
|
|
|
0.37 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinquent loans to total loans |
|
|
|
|
|
|
1.70 |
% |
|
|
|
|
|
|
1.08 |
% |
|
|
|
|
|
|
0.75 |
% |
|
|
|
|
|
|
0.37 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing Assets. The following table shows the amounts of our non-performing
assets, which include non-accruing loans, accruing loans 90 days or more past due, and other
repossessed assets at the dates indicated. We did not have real estate owned or troubled debt
restructurings at any of the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(Dollars in thousands) |
|
Non-accruing loans: |
|
|
|
|
|
|
|
|
One- to four-family residential |
|
$ |
413 |
|
|
$ |
204 |
|
Commercial real estate and lines of credit, multi-family and land |
|
|
4 |
|
|
|
4 |
|
Residential construction |
|
|
|
|
|
|
|
|
Home equity lines of credit |
|
|
|
|
|
|
|
|
Consumer non-real estate loans |
|
|
6 |
|
|
|
12 |
|
Commercial business loans |
|
|
|
|
|
|
28 |
|
|
|
|
|
|
|
|
Total non-accruing loans |
|
$ |
423 |
|
|
$ |
248 |
|
|
|
|
|
|
|
|
Accruing loans 90 days or more past due |
|
|
|
|
|
|
|
|
One- to four-family residential |
|
$ |
34 |
|
|
$ |
|
|
Commercial real estate and lines of credit, multi-family and land |
|
|
313 |
|
|
|
|
|
Residential construction |
|
|
|
|
|
|
|
|
Home equity lines of credit |
|
|
|
|
|
|
|
|
Consumer non-real estate loans |
|
|
4 |
|
|
|
|
|
Commercial business loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accruing loans 90 days or more past due |
|
$ |
351 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Total non-performing loans |
|
$ |
774 |
|
|
|
248 |
|
|
|
|
|
|
|
|
Other repossessed assets(1) |
|
|
21 |
|
|
|
2 |
|
|
|
|
|
|
|
|
Total non-performing assets |
|
$ |
795 |
|
|
$ |
250 |
|
|
|
|
|
|
|
|
Total non-performing loans as a percentage of loans, net |
|
|
1.08 |
% |
|
|
0.37 |
% |
Total non-performing loans as a percentage of total assets |
|
|
0.79 |
% |
|
|
0.29 |
% |
Total non-performing assets as a percentage of total assets |
|
|
0.81 |
% |
|
|
0.29 |
% |
|
|
|
(1) |
|
Other repossessed assets consist solely of a truck and a boat and trailer at December 31,
2010. |
7
For the year ended December 31, 2010, gross interest income of $22,000 would have been
recorded on non-accruing loans under their original terms, if the loans had been current throughout
the period. No interest income was recorded on non-accruing loans during the year ended December
31, 2010.
Classified Assets. Federal regulations require that each insured savings institution classify
its assets on a regular basis. In addition, in connection with examinations of insured
institutions, federal examiners have authority to identify problem assets and, if appropriate,
classify them. There are three classifications for problem assets: substandard, doubtful and
loss. Substandard assets have one or more defined weaknesses and are characterized by the
distinct possibility that the insured institution will sustain some loss if the deficiencies are
not corrected. Doubtful assets have the weaknesses of substandard assets with the additional
characteristic that the weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions and values questionable, and there is a higher possibility of loss. An
asset classified loss is considered uncollectible and of such little value that continuance as an
asset of the institution is not warranted. Another category designated special mention also must
be established and maintained for assets which do not currently expose an insured institution to a
sufficient degree of risk to warrant classification as substandard, doubtful or loss. Assets
classified as substandard or doubtful require the institution to establish general allowances for
loan losses. If an asset or portion thereof is classified as loss, the insured institution must
either establish specific allowances for loan losses in the amount of 100% of the portion of the
asset classified loss, or charge-off such amount. General loss allowances established to cover
possible losses related to assets classified substandard or doubtful may be included in determining
an institutions regulatory capital, while specific valuation allowances for loan losses do not
qualify as regulatory capital. Federal examiners may disagree with an insured institutions
classifications and amounts reserved.
At December 31, 2010, the Company had $367,000 of assets classified substandard and $20,000 of
assets classified loss. Non-performing loans at December 31, 2010, included $272,000 of classified
assets, the related
allowance for loan loss for which was $7,000. The Company had an additional $332,000 of assets
designated as special mention at December 31, 2010.
Allowance for Loan Losses. At December 31, 2010, the Companys allowance for loan losses
amounted to $204,000. The allowance for loan losses is maintained at a level believed, to the best
of managements knowledge, to cover all known and inherent losses in the portfolio both probable
and reasonable to estimate at each reporting date. The level of allowance for loan losses is based
on managements periodic review of the collectability of the loans in light of historical
experience, the nature and volume of the loan portfolio, adverse situations that may affect the
borrowers ability to repay, estimated value of any underlying collateral and prevailing
conditions. Bank of Ruston is primarily engaged in originating single-family residential loans
secured by owner occupied and non-owner occupied properties and commercial loans to known borrowers
in our market area. The Companys management considers the deficiencies of all classified loans in
determining the amount of allowance for loan losses required at each reporting date. Management
analyzes the probability of the correction of the classified loans weaknesses and the extent of
any known or inherent losses that Bank of Ruston might sustain on them.
While management believes that it determines the size of the allowance based on the best
information available at the time, the allowance will need to be adjusted as circumstances change
and assumptions are updated. Future adjustments to the allowance could significantly affect net
income.
The following table shows changes in our allowance for loan losses during the periods
presented.
|
|
|
|
|
|
|
|
|
|
|
At or for the Year Ended |
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(Dollars in thousands) |
|
Total loans outstanding at end of period |
|
$ |
71,817 |
|
|
$ |
67,173 |
|
Average loans outstanding |
|
|
70,964 |
|
|
|
64,231 |
|
Allowance for loan losses, beginning of period |
|
|
176 |
|
|
|
183 |
|
Provision for loan losses |
|
|
43 |
|
|
|
16 |
|
Charge-offs: |
|
|
|
|
|
|
|
|
One- to four-family residential |
|
|
|
|
|
|
(11 |
) |
Commercial real estate and lines of credit |
|
|
|
|
|
|
|
|
Multi-family |
|
|
|
|
|
|
|
|
Land |
|
|
|
|
|
|
|
|
Residential construction |
|
|
|
|
|
|
|
|
Home equity lines of credit |
|
|
|
|
|
|
|
|
Consumer non-real estate loans |
|
|
(2 |
) |
|
|
(13 |
) |
Commercial business loans |
|
|
(16 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total charge-offs |
|
|
(18 |
) |
|
|
(24 |
) |
|
|
|
|
|
|
|
Recoveries on loans previously charged off |
|
|
3 |
|
|
|
1 |
|
|
|
|
|
|
|
|
Allowance for loan losses, end of period |
|
$ |
204 |
|
|
$ |
176 |
|
|
|
|
|
|
|
|
Allowance for loan losses as a percent of non-performing loans |
|
|
26.36 |
% |
|
|
70.97 |
% |
Ratio of net charge-offs during the period to average loans outstanding during the period |
|
|
0.03 |
% |
|
|
0.04 |
% |
|
|
|
|
|
|
|
8
The following table shows how our allowance for loan losses is allocated by type of loan
at each of the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
Loan |
|
|
|
|
|
|
Loan |
|
|
|
|
|
|
|
Category |
|
|
|
|
|
|
Category |
|
|
|
Amount of |
|
|
as a % of |
|
|
Amount of |
|
|
as a % of |
|
|
|
Allowance |
|
|
Total Loans |
|
|
Allowance |
|
|
Total Loans |
|
|
|
(Dollars in thousands) |
|
One-to four-family residential |
|
$ |
50 |
|
|
|
50.50 |
% |
|
$ |
|
|
|
|
53.74 |
% |
Commercial real estate and lines of credit |
|
|
117 |
|
|
|
17.90 |
|
|
|
|
|
|
|
18.86 |
|
Multi-family |
|
|
|
|
|
|
2.82 |
|
|
|
|
|
|
|
3.35 |
|
Land |
|
|
|
|
|
|
9.60 |
|
|
|
|
|
|
|
6.39 |
|
Residential construction |
|
|
|
|
|
|
1.08 |
|
|
|
|
|
|
|
2.03 |
|
Home equity line of credit |
|
|
|
|
|
|
1.74 |
|
|
|
|
|
|
|
2.53 |
|
Consumer non-real estate |
|
|
32 |
|
|
|
8.05 |
|
|
|
23 |
|
|
|
6.50 |
|
Commercial business loans |
|
|
5 |
|
|
|
8.31 |
|
|
|
|
|
|
|
6.60 |
|
Unallocated |
|
|
|
|
|
|
|
|
|
|
153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
204 |
|
|
|
100.00 |
% |
|
$ |
176 |
|
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective for the quarter ended March 31, 2010, Bank of Ruston changed its methodology
for allocating its allowance for loan losses to more closely follow the guidance of Accounting
Standards Codification (ASC) Topic 450, Contingencies and ASC Topic 310, Receivables. The result of
our change in methodology is reflected in the above table at December 31, 2010. Prior to this
period, substantially all of our allowance was unallocated. We do not expect that the change in
methodology for allocating the allowance will impact the amount of our provisions for loan losses
in future periods.
We regularly review the loan portfolio and make provisions for loan losses in order to
maintain the allowance for loan losses in an amount management believes to be appropriate to absorb
probable losses on existing loans. The allowance for loan losses consists primarily of two
components: (1) specific allowances established for impaired loans and (2) general allowances
established for loan losses on a portfolio basis for loans that do not meet the definition of
impaired loans. A loan is deemed impaired when, based on current information, it is probable that
we will be unable to collect all amounts due under the loan contract. If impairment is determined,
Bank of Ruston will measure that impairment and create a specific valuation allowance for each such
loan. General allowances are established for the remainder of the loan portfolio which is separated
by category and, with respect to non homogenous loans, further broken down into one of three risk
classifications we have assigned to the loan. Appropriate provisions for each category are
calculated taking total loans by type and/or risk class and applying the historical four-year
charge off percentage for that category plus a current economic adjustment percentage. The
economic adjustment used at each quarterly review period is analyzed to ensure that it is
appropriate and reasonable based on current trends and economic conditions. Following the
quarterly allowance for loan loss analysis, we will make additional loan loss provisions, if
warranted, or assign unallocated provisions to the allowance account. Following the quarter ended
March 31, 2010, we further revised our methodology for allocating the allowance for loan losses
such that there generally will no longer be an unallocated component to the allowance.
9
Investment Activities
General. Our investment policy is designed primarily to manage the interest rate sensitivity
of our assets and liabilities, to generate a favorable return without incurring undue interest rate
and credit risk, to complement our lending activities and to provide and maintain liquidity.
At December 31, 2010, our investment securities portfolio amounted to $11.6 million, or 11.8%
of total assets at such date. The largest component of our securities portfolio at December 31,
2010 was U.S. Government and agency obligations, which amounted to $7.1 million, or 61.2%, of the
total investment securities portfolio. Our agency debt securities often have call provisions which
provide the agency with the ability to call the securities at specified dates. Mortgage-backed
securities amounted to $4.2 million, or 36.2%, of the investment securities portfolio at December
31, 2010. In addition, we invest in municipal securities and FHLB stock. At December 31, 2010, the
Company did not hold any Fannie Mae or Freddie Mac common or preferred stock.
At December 31, 2010, we had an aggregate of $110,000 in gross unrealized gains on our
investment securities portfolio. Such unrealized gains reflect an increase in market value of
securities as a result of changes in market rates of interest.
Management classifies securities as available-for-sale, held to maturity, or trading, at the
time of acquisition. Securities classified as held to maturity must be purchased with the intent
and ability to hold that security until its final maturity, and can be sold prior to maturity only
under rare circumstances. Held to maturity securities are accounted for based upon the historical
cost of the security. Available-for-sale securities can be sold at any time based upon needs or
market conditions. Available-for-sale securities are accounted for at fair value, with unrealized
gains and losses on these securities, net of income tax provisions, reflected in retained earnings
as accumulated other comprehensive income. At December 31, 2010, we had $11.4 million of
securities classified as available-for-sale, $137,000 of securities classified as held to maturity
and none classified as trading account.
We do not purchase mortgage-backed derivative instruments that would be characterized
high-risk under Federal banking regulations at the time of purchase, nor do we purchase corporate
obligations which are not rated investment grade or better.
Our mortgage-backed securities consist primarily of mortgage pass-through certificates issued
by the Government National Mortgage Association (GNMA or Ginnie Mae), Fannie Mae or Freddie
Mac. At December 31, 2010, all of our mortgage-backed securities were issued by the GNMA, Fannie
Mae or Freddie Mac and we held no mortgage-backed securities from private issuers.
Investments in mortgage-backed securities involve a risk that actual prepayments will be
greater than estimated prepayments over the life of the security, which may require adjustments to
the amortization of any premium or accretion of any discount relating to such instruments thereby
changing the net yield on such securities. There is also reinvestment risk associated with the
cash flows from such securities or in the event such securities are redeemed by the issuer. In
addition, the market value of such securities may be adversely affected by changes in interest
rates.
Ginnie Mae is a government agency within the Department of Housing and Urban Development which
is intended to help finance government-assisted housing programs. Ginnie Mae securities are backed
by loans insured by the Federal Housing Administration, or guaranteed by the Veterans
Administration. The timely payment of principal and interest on Ginnie Mae securities is
guaranteed by Ginnie Mae and backed by the full faith and credit of the U.S. Government. Freddie
Mac is a private corporation chartered by the U.S. Government. Freddie Mac issues participation
certificates backed principally by conventional mortgage loans. Freddie Mac guarantees the timely
payment of interest and the ultimate return of principal on participation certificates. Fannie Mae
is a private corporation chartered by the U.S. Congress with a mandate to establish a secondary
market for mortgage loans. Fannie Mae guarantees the timely payment of principal and interest on
Fannie Mae securities. Freddie Mac and Fannie Mae securities are not backed by the full faith and
credit of the U.S. Government, but because Freddie Mac and Fannie Mae are U.S. Government-sponsored
enterprises, these securities are considered to be among the highest quality investments with
minimal credit risks. In September 2008, the Federal Housing Finance Agency was appointed as
conservator of Fannie Mae and Freddie Mac. The U.S. Department of the Treasury agreed to provide
capital as needed to ensure that Fannie Mae and Freddie Mac continue to provide liquidity to the
housing and mortgage markets.
10
Investment and Mortgage-backed Securities Portfolios. The following table sets forth certain
information relating to our investment and mortgage-backed securities portfolios and our investment
in FHLB stock at the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
Amortized |
|
|
Market |
|
|
Amortized |
|
|
Market |
|
|
|
Cost |
|
|
Value |
|
|
Cost |
|
|
Value |
|
|
|
(In thousands) |
|
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
$ |
3,903 |
|
|
$ |
4,018 |
|
|
$ |
5,607 |
|
|
$ |
5,703 |
|
U.S. Government and agency obligations |
|
|
7,103 |
|
|
|
7,095 |
|
|
|
1,029 |
|
|
|
1,035 |
|
Municipal obligations |
|
|
310 |
|
|
|
313 |
|
|
|
345 |
|
|
|
348 |
|
Equity Securities |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available-for-sale |
|
|
11,316 |
|
|
|
11,426 |
|
|
|
6,982 |
|
|
|
7,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
|
137 |
|
|
|
137 |
|
|
|
171 |
|
|
|
171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities held to maturity |
|
|
137 |
|
|
|
137 |
|
|
|
171 |
|
|
|
171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB stock |
|
|
280 |
|
|
|
280 |
|
|
|
280 |
|
|
|
280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment and mortgage-
backed securities and FHLB stock |
|
$ |
11,733 |
|
|
$ |
11,843 |
|
|
$ |
7,433 |
|
|
$ |
7,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth the amount of investment securities which mature during
each of the periods indicated and the weighted average yields for each range of maturities at
December 31, 2010. As the Company held no tax-exempt securities during the periods presented, no
yield adjustments were made.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts at December 31, 2010, Which Mature In |
|
|
|
|
|
|
|
After One |
|
|
After Five |
|
|
|
|
|
|
|
|
|
One Year |
|
|
to Five |
|
|
to Ten |
|
|
Over 10 |
|
|
|
|
|
|
or Less |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
Total |
|
|
|
(Dollars in thousands) |
|
Available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
$ |
|
|
|
$ |
|
|
|
$ |
101 |
|
|
$ |
3,917 |
|
|
$ |
4,018 |
|
U.S. government and agency obligations |
|
|
1,012 |
|
|
|
6,083 |
|
|
|
|
|
|
|
|
|
|
|
7,095 |
|
Municipal obligations |
|
|
|
|
|
|
|
|
|
|
313 |
|
|
|
|
|
|
|
313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,012 |
|
|
|
6,083 |
|
|
|
414 |
|
|
|
3,917 |
|
|
|
11,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield |
|
|
0.88 |
% |
|
|
0.41 |
% |
|
|
1.81 |
% |
|
|
1.71 |
% |
|
|
1.71 |
% |
Held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
$ |
3 |
|
|
$ |
|
|
|
$ |
134 |
|
|
$ |
|
|
|
$ |
137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3 |
|
|
|
|
|
|
|
134 |
|
|
|
|
|
|
|
137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield |
|
|
n/m |
* |
|
|
|
% |
|
|
1.63 |
% |
|
|
|
% |
|
|
1.63 |
% |
Total mortgage-backed and investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
$ |
3 |
|
|
$ |
|
|
|
$ |
235 |
|
|
$ |
3,917 |
|
|
$ |
4,155 |
|
U.S. government and agency obligations |
|
|
1,012 |
|
|
|
6,083 |
|
|
|
|
|
|
|
|
|
|
|
7,095 |
|
Municipal obligations |
|
|
|
|
|
|
|
|
|
|
313 |
|
|
|
|
|
|
|
313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,015 |
|
|
|
6,083 |
|
|
|
548 |
|
|
|
3,917 |
|
|
|
11,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield |
|
|
0.88 |
% |
|
|
0.41 |
% |
|
|
1.75 |
% |
|
|
1.71 |
% |
|
|
1.70 |
% |
11
The following table sets forth the composition of our mortgage-backed securities
portfolio at each of the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
Fixed-rate: |
|
|
|
|
|
|
|
|
Available-for-sale |
|
$ |
1,343 |
|
|
$ |
2,007 |
|
Held to maturity |
|
|
3 |
|
|
|
19 |
|
|
|
|
|
|
|
|
Total fixed-rate |
|
|
1,346 |
|
|
|
2,026 |
|
|
|
|
|
|
|
|
Adjustable-rate: |
|
|
|
|
|
|
|
|
Available-for-sale |
|
|
2,675 |
|
|
|
3,696 |
|
Held to maturity |
|
|
134 |
|
|
|
151 |
|
|
|
|
|
|
|
|
Total adjustable-rate |
|
|
2,809 |
|
|
|
3,847 |
|
|
|
|
|
|
|
|
Total mortgage-backed securities |
|
$ |
4,155 |
|
|
$ |
5,873 |
|
|
|
|
|
|
|
|
Sources of Funds
General. Deposits are the primary source of Bank of Rustons funds for lending and other
investment purposes. In addition to deposits, principal and interest payments on loans are a source
of funds. Loan repayments are a relatively stable source of funds, while deposit inflows and
outflows are significantly influenced by general interest rates and money market conditions.
Borrowings may also be used on a short-term basis to compensate for reductions in the availability
of funds from other sources and on a longer-term basis for general business purposes.
Deposits. Deposits are attracted by Bank of Ruston principally from Lincoln Parish,
Louisiana. Deposit account terms vary, with the principal differences being the minimum balance
required, the time periods the funds must remain on deposit and the interest rate.
Bank of Ruston has not solicited deposits from outside Louisiana or paid fees to brokers to
solicit funds for deposit.
Interest rates paid, maturity terms, service fees and withdrawal penalties are established on
a periodic basis. Management determines the rates and terms based on rates paid by competitors, the
need for funds or liquidity, growth goals and federal regulations. The Company attempts to control
the flow of deposits by pricing its accounts to remain generally competitive with other financial
institutions in its market area.
The following table shows the distribution of, and certain other information relating to, our
deposits by type of deposit, as of the dates indicated. For purposes of the following table, time deposits include statement
savings accounts in individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
Amount |
|
|
% |
|
|
Amount |
|
|
% |
|
|
|
(Dollars in thousands) |
|
Certificate accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.00% 0.99% |
|
$ |
3,977 |
|
|
|
5.10 |
% |
|
$ |
|
|
|
|
|
% |
1.00% 1.99% |
|
|
21,142 |
|
|
|
27.14 |
|
|
|
14,958 |
|
|
|
19.70 |
|
2.00% 2.99% |
|
|
11,900 |
|
|
|
15.28 |
|
|
|
17,294 |
|
|
|
22.77 |
|
3.00% 3.99% |
|
|
1,697 |
|
|
|
2.18 |
|
|
|
11,557 |
|
|
|
15.22 |
|
4.00% 4.99% |
|
|
|
|
|
|
|
|
|
|
475 |
|
|
|
0.63 |
|
5.00% or more |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total certificate accounts |
|
$ |
38,716 |
|
|
|
49.70 |
% |
|
$ |
44,284 |
|
|
|
58.31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
$ |
6,839 |
|
|
|
8.78 |
% |
|
$ |
6,716 |
|
|
|
8.84 |
% |
Checking: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing |
|
|
15,997 |
|
|
|
20.54 |
|
|
|
13,919 |
|
|
|
18.33 |
|
Non-interest bearing |
|
|
7,881 |
|
|
|
10.12 |
|
|
|
7,065 |
|
|
|
9.30 |
|
Money market |
|
|
8,462 |
|
|
|
10.86 |
|
|
|
3,959 |
|
|
|
5.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transaction accounts |
|
|
39,179 |
|
|
|
50.30 |
|
|
|
31,659 |
|
|
|
41.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
|
$ |
77,895 |
|
|
|
100.00 |
% |
|
$ |
75,943 |
|
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
12
The following table shows the average balance of each type of deposit and the average
rate paid on each type of deposit for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
Average |
|
|
Interest |
|
|
Rate |
|
|
Average |
|
|
Interest |
|
|
Rate |
|
|
|
Balance |
|
|
Expense |
|
|
Paid |
|
|
Balance |
|
|
Expense |
|
|
Paid |
|
|
|
(Dollars in thousands) |
|
Savings accounts |
|
$ |
7,035 |
|
|
$ |
28 |
|
|
|
0.40 |
% |
|
$ |
7,213 |
|
|
$ |
52 |
|
|
|
0.72 |
% |
Checking
Interest Bearing |
|
|
15,985 |
|
|
|
64 |
|
|
|
0.40 |
|
|
|
14,629 |
|
|
|
97 |
|
|
|
0.66 |
|
Money market |
|
|
5,968 |
|
|
|
59 |
|
|
|
1.00 |
|
|
|
3,528 |
|
|
|
48 |
|
|
|
1.36 |
|
Certificates of Deposit |
|
|
42,853 |
|
|
|
842 |
|
|
|
1.96 |
|
|
|
40,255 |
|
|
|
1,010 |
|
|
|
2.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest- bearing deposits |
|
$ |
71,841 |
|
|
$ |
993 |
|
|
|
1.38 |
|
|
$ |
65,625 |
|
|
$ |
1,293 |
|
|
|
1.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
|
$ |
80,083 |
|
|
$ |
993 |
|
|
|
1.24 |
% |
|
$ |
72,345 |
|
|
$ |
1,293 |
|
|
|
1.79 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows our deposit flows during the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
Total deposits |
|
$ |
343,949 |
|
|
$ |
280,943 |
|
Total withdrawals |
|
|
(343,000 |
) |
|
|
(275,574 |
) |
Interest credited |
|
|
1,003 |
|
|
|
1,292 |
|
|
|
|
|
|
|
|
Total increase in deposits |
|
$ |
1,952 |
|
|
$ |
6,661 |
|
|
|
|
|
|
|
|
The following table presents, by various interest rate categories and maturities, the
amount of certificates of deposit, excluding individual retirement accounts, at December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010 |
|
|
|
Maturing in the 12 Months Ending December 31, |
|
Certificates of Deposit |
|
2011 |
|
|
2012 |
|
|
2013 |
|
|
Thereafter |
|
|
Total |
|
|
|
(In thousands) |
|
0.00% 0.99% |
|
$ |
3,977 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,977 |
|
1.00% 1.99% |
|
|
19,445 |
|
|
|
1,697 |
|
|
|
|
|
|
|
|
|
|
|
21,142 |
|
2.00% 2.99% |
|
|
5,890 |
|
|
|
570 |
|
|
|
|
|
|
|
|
|
|
|
6,460 |
|
3.00% 3.99% |
|
|
1,567 |
|
|
|
|
|
|
|
|
|
|
|
130 |
|
|
|
1,697 |
|
4.00% 4.99% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.00% or more |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total certificate accounts |
|
$ |
30,879 |
|
|
$ |
2,267 |
|
|
$ |
|
|
|
$ |
130 |
|
|
$ |
33,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the maturities of our certificates of deposit of $100,000 or
more at December 31, 2010, by time remaining to maturity.
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010 |
|
Quarter Ending: |
|
Amount |
|
|
Weighted Average Rate |
|
|
|
(Dollars in thousands) |
|
March 31, 2011 |
|
$ |
4,396 |
|
|
|
1.61 |
% |
June 30, 2011 |
|
|
3,747 |
|
|
|
1.57 |
|
September 30, 2011 |
|
|
2,431 |
|
|
|
1.82 |
|
December 31, 2011 |
|
|
2,611 |
|
|
|
1.44 |
|
After December 31, 2011 |
|
|
917 |
|
|
|
2.10 |
|
|
|
|
|
|
|
|
Total certificates of deposit with balances of $100,000 or more |
|
$ |
14,102 |
|
|
|
1.64 |
% |
|
|
|
|
|
|
|
Borrowings. The Company may obtain advances from the Federal Home Loan Bank of
Dallas upon the security of the common stock it owns in that bank and certain of its residential
mortgage loans and mortgage-backed and other investment securities, provided certain standards
related to creditworthiness have been met. These advances are made pursuant to several credit
programs, each of which has its own interest rate and range of maturities. Federal Home Loan Bank
advances are generally available to meet seasonal and other withdrawals of deposit accounts and to
permit increased lending.
As of December 31, 2010, the Company was permitted to borrow up to an aggregate total of $41.2
million from the Federal Home Loan Bank of Dallas. The Company had Federal Home Loan Bank advances
in the amount of $415,000 outstanding at December 31, 2010. Additionally, at December 31, 2010,
Bank of Ruston was a party to a Master Purchase Agreement with First National Bankers Bank whereby
Bank of Ruston may purchase Federal Funds from First National Bankers Bank in an amount not to
exceed $2.5 million. There were no amounts purchased under this agreement as of December 31, 2010.
13
In addition to FHLB advances, our borrowings include securities sold under agreements to
repurchase. Repurchase agreements are contracts for the sale of securities owned or borrowed by
Bank of Ruston, with an agreement to repurchase those securities at an agreed upon price and date.
We use repurchase agreements as an investment vehicle for our commercial sweep checking product.
We enter into securities repurchase agreements with our commercial checking account customers under
a sweep account arrangement. Account balances are swept on a daily basis into mortgage-backed
securities purchases from us, which we agree to repurchase as the checking account is drawn upon by
the customer. At December 31, 2010, our securities repurchase agreements amounted to $588,000 and
all of such borrowings were short-term, having maturities of one year or less. The average balance
of our securities sold under repurchase agreements for the year ended December 31, 2010 was
$951,000.
The following table shows certain information regarding our borrowings at or for the dates
indicated:
|
|
|
|
|
|
|
|
|
|
|
At or For the Year Ended |
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(Dollars in thousands) |
|
FHLB advances and other borrowings: |
|
|
|
|
|
|
|
|
Average balance outstanding |
|
$ |
1,077 |
|
|
$ |
1,070 |
|
Maximum amount outstanding at any month-end during the period |
|
|
1,372 |
|
|
|
960 |
|
Balance outstanding at end of period |
|
|
1,003 |
|
|
|
907 |
|
Average interest rate during the period |
|
|
1.21 |
% |
|
|
2.62 |
% |
Weighted average interest rate at end of period |
|
|
1.92 |
% |
|
|
1.03 |
% |
Subsidiaries
At December 31, 2010, Century Next Financial had one subsidiary, Bank of Ruston.
Total Employees
Bank of Ruston had 31 full-time and two part-time employees at December 31, 2010. None of
these employees are represented by a collective bargaining agreement, and Bank of Ruston believes
that it enjoys good relations with its personnel.
REGULATION
Set forth below is a brief description of certain laws relating to the regulation of Century
Next Financial and Bank of Ruston. This description does not purport to be complete and is
qualified in its entirety by reference to applicable laws and regulations.
General
Century Next Financial, a Louisiana corporation, is the parent holding company for Bank of
Ruston. Century Next Financial is a registered savings and loan holding company and is required to
file certain reports with, is subject to examination by, and otherwise must comply with the rules
and regulations of the Office of Thrift Supervision. Century Next Financial is also subject to the
rules and regulations of the Securities and Exchange Commission under the federal securities laws.
14
Bank of Ruston, as a federally chartered savings bank, is subject to federal regulation and
oversight by the Office of Thrift Supervision extending to all aspects of its operations. Bank of
Ruston also is subject to regulation and examination by the Federal Deposit Insurance Corporation,
which insures the deposits of Bank of Ruston to the maximum extent permitted by law, and
requirements established by the Federal Reserve Board. Federally chartered savings institutions
are required to file periodic reports with the Office of Thrift Supervision and are subject to
periodic examinations by the Office of Thrift Supervision and the Federal Deposit Insurance
Corporation. The investment and lending authority of savings institutions are prescribed by
federal laws and regulations, and such institutions are prohibited from engaging in any activities
not permitted by such laws and regulations. Such regulation and supervision primarily is intended
for the protection of depositors and not for the purpose of protecting shareholders.
Federal law provides the federal banking regulators, including the Office of Thrift
Supervision and Federal Deposit Insurance Corporation, with substantial enforcement powers. The
Office of Thrift Supervisions enforcement authority over all savings institutions and their
holding companies includes, among other things, the ability to assess civil money penalties, to
issue cease and desist or removal orders and to initiate injunctive actions. In general, these
enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound
practices. Other actions or inactions may provide the basis for enforcement action, including
misleading or untimely reports filed with the Office of Thrift Supervision. Any change in such
regulations, whether by the Federal Deposit Insurance Corporation, Office of Thrift Supervision or
Congress, could have a material adverse impact on Century Next Financial and Bank of Ruston and
their operations.
Under the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act, the
powers of the Office of Thrift Supervision regarding Bank of Ruston and Century Next Financial will
transfer to other federal financial institution regulatory agencies on July 21, 2011, unless
extended up to an additional six months. See Recently Enacted Regulatory Reform. As of the
transfer date, all of the regulatory functions related to Bank of Ruston that are currently under
the jurisdiction of the Office of Thrift Supervision will transfer to the Office of the Comptroller
of the Currency. In addition, as of that same date, all of the regulatory functions related to
Century Next Financial, as a savings and loan holding company that are currently under the
jurisdiction of the Office of Thrift Supervision, will transfer to the Federal Reserve.
Recently Enacted Regulatory Reform
On July 21, 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer
Protection Act. The financial reform and consumer protection act imposes new restrictions and an
expanded framework of regulatory oversight for financial institutions, including depository
institutions. In addition, the new law changes the jurisdictions of existing bank regulatory
agencies and in particular transfers the regulation of federal savings associations from the Office
of Thrift Supervision to the Office of Comptroller of the Currency, effective one year from the
effective date of the legislation, with a potential extension up to six months. Savings and loan
holding companies will be regulated by the Board of Governors of the Federal Reserve System. The
new law also establishes an independent federal consumer protection bureau within the Federal
Reserve. The following discussion summarizes significant aspects of the new law that may affect
Bank of Ruston and Century Next Financial. Regulations implementing these changes have not been
promulgated, so we cannot determine the full impact on our business and operations at this time.
The following aspects of the financial reform and consumer protection act are related to the
operations of Bank of Ruston:
|
|
|
The Office of Thrift Supervision will be merged into the Office of the Comptroller
of the Currency and the authority of the other two bank regulatory agencies
restructured. The federal thrift charter will be preserved with the Federal Reserve
given authority over savings and loan holding companies. |
|
|
|
A new independent consumer financial protection bureau will be established within
the Federal Reserve, empowered to exercise broad regulatory, supervisory and
enforcement authority with respect to both new and existing consumer financial
protection laws. Smaller financial institutions, like Bank of Ruston, will be subject
to the supervision and enforcement of their primary federal banking regulator with
respect to the federal consumer financial protection laws.
|
15
|
|
|
The Federal Deposit Insurance Act was amended to direct federal regulators to
require depository institution holding companies to serve as a source of strength for
their depository institution subsidiaries. |
|
|
|
Tier 1 capital treatment for hybrid capital items like trust preferred securities
is eliminated subject to various grandfathering and transition rules. |
|
|
|
The current prohibition on payment of interest on demand deposits was repealed,
effective July 21, 2011. |
|
|
|
State law is preempted only if it would have a discriminatory effect on a federal
savings association or is preempted by any other federal law. The Office of the
Comptroller of the Currency must make a preemption determination on a case-by-case
basis with respect to a particular state law or other state law with substantively
equivalent terms. |
|
|
|
Deposit insurance is permanently increased to $250,000 and unlimited deposit
insurance for noninterest-bearing transaction accounts extended through the end of
2012. |
|
|
|
Deposit insurance assessment base calculation will equal the depository
institutions total assets minus the sum of its average tangible equity during the
assessment period. |
|
|
|
The minimum reserve ratio of the Deposit Insurance Fund increased to 1.35 percent of
estimated annual insured deposits or assessment base; however, the Federal Deposit
Insurance Corporation is directed to offset the effect of the increased reserve ratio
for insured depository institutions with total consolidated assets of less than $10
billion. |
The following aspects of the financial reform and consumer protection act are related to the
operations of Century Next Financial:
|
|
|
Leverage capital requirements and risk based capital requirements applicable to
depository institutions will be extended to thrift holding companies. |
|
|
|
The Securities and Exchange Commission is authorized to adopt rules requiring public
companies to make their proxy materials available to shareholders for nomination of
their own candidates for election to the board of directors. |
|
|
|
Public companies will be required to provide their shareholders with a non-binding
vote: (i) at least once every three years on the compensation paid to executive
officers, and (ii) at least once every six years on whether they should have a say on
pay vote every one, two or three years. |
|
|
|
A separate, non-binding shareholder vote will be required regarding golden
parachutes for named executive officers when a shareholder vote takes place on mergers,
acquisitions, dispositions or other transactions that would trigger the parachute
payments. |
|
|
|
Securities exchanges will be required to prohibit brokers from using their own
discretion to vote shares not beneficially owned by them for certain significant
matters, which include votes on the election of directors, executive compensation
matters, and any other matter determined to be significant.
|
16
|
|
|
Stock exchanges, which does not include the OTC Bulletin Board, will be prohibited
from listing the securities of any issuer that does not have a policy providing for (i)
disclosure of its policy on incentive compensation payable on the basis of financial
information reportable under the securities laws, and (ii) the recovery from current or
former executive officers, following an accounting restatement triggered by material
noncompliance with securities law reporting requirements, of any incentive compensation
paid erroneously during the three-year period preceding the date on which the
restatement was required that exceeds the amount that would have been paid on the basis
of the restated financial information. |
|
|
|
Disclosure in annual proxy materials will be required concerning the relationship
between the executive compensation paid and the financial performance of the issuer. |
|
|
|
Item 402 of Regulation S-K will be amended to require companies to disclose the
ratio of the Chief Executive Officers annual total compensation to the median annual
total compensation of all other employees. |
|
|
|
Smaller reporting companies are exempt from complying with the internal control
auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. |
Regulation of Century Next Financial Corporation
Holding Company Acquisitions. Century Next Financial is a savings and loan holding company
under the Home Owners Loan Act, as amended, registered with the Office of Thrift Supervision.
Federal law generally prohibits a savings and loan holding company, without prior Office of Thrift
Supervision approval, from acquiring the ownership or control of any other savings institution or
savings and loan holding company, or all, or substantially all, of the assets or more than 5% of
the voting shares of the savings institution or savings and loan holding company. These provisions
also prohibit, among other things, any director or officer of a savings and loan holding company,
or any individual who owns or controls more than 25% of the voting shares of such holding company,
from acquiring control of any savings institution not a subsidiary of such savings and loan holding
company, unless the acquisition is approved by the Office of Thrift Supervision.
The Office of Thrift Supervision may not approve any acquisition that would result in a
multiple savings and loan holding company controlling savings institutions in more than one state,
subject to two exceptions: (1) the approval of interstate supervisory acquisitions by savings and
loan holding companies; and (2) the acquisition of a savings institution in another state if the
laws of the state of the target savings institution specifically permit such acquisitions. The
states vary in the extent to which they permit interstate savings and loan holding company
acquisitions.
Holding Company Activities. Century Next Financial operates as a unitary savings and loan
holding company and is permitted to engage only in the activities permitted for financial holding
companies under Federal Reserve Board regulations or for multiple savings and loan holding
companies. Multiple savings and loan holding companies are permitted to engage in the following
activities: (i) activities permitted for a bank holding company under section 4(c) of the Bank
Holding Company Act (unless the Director of the Office of Thrift Supervision prohibits or limits
such 4(c) activities); (ii) furnishing or performing management services for a subsidiary savings
association; (iii) conducting any insurance agency or escrow business; (iv) holding, managing, or
liquidating assets owned by or acquired from a subsidiary savings association; (v) holding or
managing properties used or occupied by a subsidiary savings association; (vi) acting as trustee
under deeds of trust; or (vii) activities authorized by regulation as of March 5, 1987, to be
engaged in by multiple savings and loan holding companies. Although savings and loan holding
companies are not subject to specific capital requirements, until the recently enacted legislation
becomes effective, or specific restrictions on the payment of dividends or other capital
distributions, federal regulations do prescribe such restrictions on subsidiary savings
institutions, as described below. Bank of Ruston is required to notify the Office of Thrift
Supervision 30 days before declaring any dividend. In addition, the financial impact of a holding
company on its subsidiary institution is a matter that is evaluated by the Office of Thrift
Supervision and the agency has authority to order cessation of activities or divestiture of
subsidiaries deemed to pose a threat to the safety and soundness of the institution.
Federal Securities Laws. Century Next Financials common stock is registered with the
Securities and Exchange Commission under Section 12(g) of the Securities Exchange Act of 1934. We
are subject to the proxy and tender offer rules, insider trading reporting requirements and
restrictions, and certain other requirements under the Securities Exchange Act of 1934. Pursuant
to Office of Thrift Supervision regulations and the plan of conversion, we have agreed to maintain
such registration for a minimum of three years following Bank of Rustons mutual-to-stock
conversion.
17
The Sarbanes-Oxley Act of 2002. Century Next Financial is subject to the Sarbanes-Oxley Act
of 2002, which implements a broad range of corporate governance and accounting measures for public
companies designed to promote honesty and transparency in corporate America and better protect
investors from corporate wrongdoing. The Sarbanes-Oxley Acts principal legislation and the
derivative regulation and rule-making promulgated by the SEC include:
|
|
|
the creation of an independent accounting oversight board; |
|
|
|
auditor independence provisions that restrict non-audit services that accountants
may provide to their audit clients; |
|
|
|
|
additional corporate governance and responsibility measures, including the
requirement that the chief executive officer and chief financial officer certify
financial statements; |
|
|
|
a requirement that companies establish and maintain a system of internal control
over financial reporting and that a companys management provide an annual report
regarding its assessment of the effectiveness of such internal control over financial
reporting to the companys independent accountants and that such accountants provide an
attestation report with respect to managements assessment of the effectiveness of the
companys internal control over financial reporting; |
|
|
|
the forfeiture of bonuses or other incentive-based compensation and profits from the
sale of an issuers securities by directors and senior officers in the twelve month
period following initial publication of any financial statements that later require
restatement; |
|
|
|
an increase in the oversight of, and enhancement of certain requirements relating to
audit committees of public companies and how they interact with the companys
independent auditors; |
|
|
|
the requirement that audit committee members must be independent and are absolutely
barred from accepting consulting, advisory or other compensatory fees from the issuer; |
|
|
|
the requirement that companies disclose whether at least one member of the audit
committee is a financial expert (as such term is defined by the SEC) and if not, why
not; |
|
|
|
expanded disclosure requirements for corporate insiders, including accelerated
reporting of stock transactions by insiders and a prohibition on insider trading during
pension blackout periods; |
|
|
|
a prohibition on personal loans to directors and officers, except certain loans made
by insured financial institutions; |
|
|
|
disclosure of a code of ethics and the requirement of filing of a Form 8-K for a
change or waiver of such code; |
|
|
|
mandatory disclosure by analysts of potential conflicts of interest; and |
|
|
|
a range of enhanced penalties for fraud and other violations. |
18
Regulation of Bank of Ruston
General. The Office of Thrift Supervision is Bank of Rustons primary federal regulator and
has extensive authority over the operations of federally-chartered savings institutions. As part
of this authority, Bank of Ruston is required to file periodic reports with the Office of Thrift
Supervision and is subject to periodic examinations by the Office of Thrift Supervision and the
Federal Deposit Insurance Corporation. The investment and lending authorities of savings
institutions are prescribed by federal laws and regulations, and such institutions are prohibited
from engaging in any activities not permitted by such laws and regulations. Such regulation and
supervision is primarily intended for the protection of depositors and the Deposit Insurance Fund
administered by the Federal Deposit Insurance Corporation.
The Office of Thrift Supervisions enforcement authority over all savings institutions and
their holding companies includes, among other things, the ability to assess civil money penalties,
to issue cease and desist or removal orders and to initiate injunctive actions. In general, these
enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound
practices. Other actions or inactions may provide the basis for enforcement action, including
misleading or untimely reports filed with the Office of Thrift Supervision.
Insurance of Accounts. The deposits of the Bank are insured to the maximum extent permitted
by the DIF and are backed by the full faith and credit of the U.S. Government. As insurer, the
Federal Deposit Insurance Corporation is authorized to conduct examinations of, and to require
reporting by, insured institutions. It also may
prohibit any insured institution from engaging in any activity determined by regulation or
order to pose a serious threat to the Federal Deposit Insurance Corporation. The Federal Deposit
Insurance Corporation also has the authority to initiate enforcement actions against savings
institutions, after giving the Office of Thrift Supervision an opportunity to take such action.
The recently enacted financial institution reform legislation permanently increased deposit
insurance on most accounts to $250,000. In addition, pursuant to Section 13(c)(4)(G) of the Federal
Deposit Insurance Act, the Federal Deposit Insurance Corporation has implemented two temporary
programs to provide deposit insurance for the full amount of most non-interest bearing transaction
deposit accounts and to guarantee certain unsecured debt of financial institutions and their
holding companies. Under the unsecured debt program, the FDICs guarantee expires on the earlier of
the maturity date of the debt or December 31, 2012. The unlimited deposit insurance for
noninterest-bearing transaction accounts was extended by the Dodd-Frank Act through the end of 2012
for all insured institutions without a separate insurance assessment (but the cost of the
additional insurance coverage will be considered under the risk-based assessment system). Bank of
Ruston did not participate in the temporary liquidity guarantee program.
The Federal Deposit Insurance Corporations risk-based premium system provides for quarterly
assessments. Each insured institution is placed in one of four risk categories based upon
supervisory and capital evaluations. Within its risk category, an institution is assigned to an
initial base assessment rate which is then adjusted to determine its final assessment rate based on
its brokered deposits, secured liabilities and unsecured debt. Assessment rates range from seven
to 77.5 basis points, with less risky institutions paying lower assessments. The Federal Deposit
Insurance Corporation recently amended its deposit insurance regulations (1) to change the
assessment base for insurance from domestic deposits to average assets minus average tangible
equity and (2) to lower overall assessment rates. The revised assessment rates are between 2.5 and
9 basis points for banks in the lower risk category and between 30 to 45 basis points for banks in
the highest risk category. The amendments will become effective for the quarter beginning April 1,
2011 with the new assessment methodology being reflected in the premium invoices due September 30,
2011.
In addition, all institutions with deposits insured by the Federal Deposit Insurance
Corporation are required to pay assessments to fund interest payments on bonds issued by the
Financing Corporation, a mixed-ownership government corporation established to recapitalize the
predecessor to the Deposit Insurance Fund. These assessments will continue until the Financing
Corporation bonds mature in 2019.
The Federal Deposit Insurance Corporation may terminate the deposit insurance of any insured
depository institution, including Bank of Ruston, if it determines after a hearing that the
institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound
condition to continue operations, or has violated any applicable law, regulation, order or any
condition imposed by an agreement with the Federal Deposit Insurance Corporation. It also may
suspend deposit insurance temporarily during the hearing process for the permanent termination of
insurance, if the institution has no tangible capital. If insurance of accounts is terminated, the
accounts at the institution at the time of the termination, less subsequent withdrawals, shall
continue to be insured for a period of six months to two years, as determined by the Federal
Deposit Insurance Corporation. Management is aware of no existing circumstances which would result
in termination of Bank of Rustons deposit insurance.
19
On May 22, 2009, the Federal Deposit Insurance Corporation announced a five basis point
special assessment on each insured depository institutions assets minus its Tier 1 capital as of
June 30, 2009. The Federal Deposit Insurance Corporation collected the special assessment on
September 30, 2009. Based on our assets and Tier 1 capital at June 30, 2009, the impact of the
special assessment was $36,000, which was expensed in the second quarter of fiscal 2009.
On November 12, 2009, the Federal Deposit Insurance Corporation approved a requirement for
insured deposit institutions to prepay 13 quarters of estimated insurance assessments. Prepayment
of the assessment was included with the December 30, 2009 invoice and totaled approximately
$375,000. Unlike a special assessment, this prepayment will not immediately affect bank earnings.
Banks will book the prepaid assessment as a non-earning asset and record the actual risk-based
premium payments at the end of each quarter.
Regulatory Capital Requirements. Federally insured savings institutions are required to
maintain minimum levels of regulatory capital. The Office of Thrift Supervision has established
capital standards consisting of a tangible capital requirement, a leverage capital requirement
and a risk-based capital requirement. The Office of Thrift Supervision also is authorized to
impose capital requirements in excess of these standards on individual institutions on a
case-by-case basis.
Current Office of Thrift Supervision capital standards require savings institutions to satisfy
the following capital requirements:
|
|
|
tangible capital requirement tangible capital equal to at least 1.5% of
adjusted total assets; |
|
|
|
leverage capital requirement core capital equal to at least 4.0% of adjusted
total assets; and |
|
|
|
risk-based capital requirement total capital (a combination of core and
supplementary capital) equal to at least 8.0% of risk-weighted assets. |
Core capital generally consists of common stockholders equity (including retained earnings).
Tangible capital generally equals core capital minus intangible assets, with only a limited
exception for purchased mortgage servicing rights. The Bank had no intangible assets at December
31, 2010. Both core and tangible capital are further reduced by an amount equal to a savings
institutions debt and equity investments in subsidiaries engaged in activities not permissible to
national banks (other than subsidiaries engaged in activities undertaken as agent for customers or
in mortgage banking activities and subsidiary depository institutions or their holding companies).
These adjustments do not affect Bank of Rustons regulatory capital.
In determining compliance with the risk-based capital requirement, a savings institution is
allowed to include both core capital and supplementary capital in its total capital, provided that
the amount of supplementary capital included does not exceed the savings institutions core
capital. Supplementary capital generally consists of general allowances for loan losses up to a
maximum of 1.25% of risk-weighted assets, together with certain other items. In determining the
required amount of risk-based capital, total assets, including certain off-balance sheet items, are
multiplied by a risk weight based on the risks inherent in the type of assets. The risk weights
range from 0% for cash and securities issued by the U.S. Government or unconditionally backed by
the full faith and credit of the U.S. Government to 100% for loans (other than qualifying
residential loans weighted at 80%) and repossessed assets.
Savings institutions must value securities available for sale at amortized cost for regulatory
capital purposes. This means that in computing regulatory capital, savings institutions should add
back any unrealized losses and deduct any unrealized gains, net of income taxes, on debt securities
reported as a separate component of capital, as defined by generally accepted accounting
principles.
At December 31, 2010, Bank of Ruston exceeded all of its regulatory capital requirements, with
tangible, core and risk-based capital ratios of 14.6%, 14.6% and 21.4%, respectively.
Any savings institution that fails any of the capital requirements is subject to possible
enforcement actions by the Office of Thrift Supervision or the Federal Deposit Insurance
Corporation. Such actions could include a capital directive, a cease and desist order, civil money
penalties, the establishment of restrictions on the institutions operations, termination of
federal deposit insurance and the appointment of a conservator or receiver. The Office of Thrift
Supervisions capital regulation provides that such actions, through enforcement proceedings or
otherwise, could require one or more of a variety of corrective actions.
20
Prompt Corrective Action. The following table shows the amount of capital associated with the
different capital categories set forth in the prompt corrective action regulations.
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|
Total Risk-based |
|
|
Tier 1 Risk-based |
|
|
Tier 1 Leverage |
|
Capital Category |
|
Capital |
|
|
Capital |
|
|
Capital |
|
Well capitalized |
|
10% or more |
|
6% or more |
|
5% or more |
Adequately capitalized |
|
8% or more |
|
4% or more |
|
4% or more |
Undercapitalized |
|
Less than 8% |
|
Less than 4% |
|
Less than 4% |
Significantly undercapitalized |
|
Less than 6% |
|
Less than 3% |
|
Less than 3% |
In addition, an institution is critically undercapitalized if it has a ratio of
tangible equity to total assets that is equal to or less than 2.0%. Under specified circumstances,
a federal banking agency may reclassify a well capitalized institution as adequately capitalized
and may require an adequately capitalized institution or an undercapitalized institution to comply
with supervisory actions as if it were in the next lower category (except that the Federal Deposit
Insurance Corporation may not reclassify a significantly undercapitalized institution as critically
undercapitalized).
An institution generally must file a written capital restoration plan which meets specified
requirements within 45 days of the date that the institution receives notice or is deemed to have
notice that it is undercapitalized, significantly undercapitalized or critically undercapitalized.
A federal banking agency must provide the institution with written notice of approval or
disapproval within 60 days after receiving a capital restoration plan, subject to extensions by the
agency. An institution which is required to submit a capital restoration plan must concurrently
submit a performance guaranty by each company that controls the institution. In addition,
undercapitalized institutions are subject to various regulatory restrictions, and the appropriate
federal banking agency also may take any number of discretionary supervisory actions.
At December 31, 2010, Bank of Ruston was deemed a well capitalized institution for purposes of
the prompt corrective regulations and as such is not subject to the above mentioned restrictions.
Capital Distributions. Office of Thrift Supervision regulations govern capital distributions
by savings institutions, which include cash dividends, stock repurchases and other transactions
charged to the capital account of a savings institution to make capital distributions. A savings
institution must file an application for Office of Thrift Supervision approval of the capital
distribution if either (1) the total capital distributions for the applicable calendar year exceed
the sum of the institutions net income for that year to date plus the institutions retained net
income for the preceding two years, (2) the institution would not be at least adequately
capitalized following the distribution, (3) the distribution would violate any applicable statute,
regulation, agreement or Office of Thrift Supervision-imposed condition, or (4) the institution is
not eligible for expedited treatment of its filings. If an application is not required to be
filed, savings institutions which are a subsidiary of a savings and loan holding company (as well
as certain other institutions) must still file a notice with the Office of Thrift Supervision at
least 30 days before the board of directors declares a dividend or approves a capital distribution.
Qualified Thrift Lender Test. All savings institutions are required to meet a qualified
thrift lender, or QTL, test to avoid certain restrictions on their operations. A savings
institution can comply with the QTL test by either qualifying as a domestic building and loan
association as defined in the Internal Revenue Code or meeting the Office of Thrift Supervision QTL
test.
Currently, the Office of Thrift Supervision QTL test requires that 65% of an institutions
portfolio assets (as defined) consist of certain housing and consumer-related assets on a monthly
average basis in nine out of every 12 months. To be a qualified thrift lender under the IRS test,
the savings institution must meet a business operations test and a 60 percent assets test, each
defined in the Internal Revenue Code.
21
If the savings institution fails to maintain its QTL status, the holding companys activities
are restricted. In addition, it must discontinue any non-permissible business, although the Office
of Thrift Supervision may grant a grace period up to two years for good cause. Under the
Dodd-Frank Wall Street Reform and Consumer Protection Act, the savings institution is also
prohibited from paying dividends and is subject to an enforcement action for violation of the Home
Owners Loan Act, as amended. Nonetheless, any company that controls a savings institution
that is not a qualified thrift lender must register as a bank holding company within one year
of the savings institutions failure to meet the QTL test.
Statutory penalty provisions require an institution that fails to remain a QTL to either
become a national bank or be prohibited from the following:
|
|
|
Making any new investments or engaging in any new activity not allowed for both a
national bank and a savings association; |
|
|
|
Establishing any new branch office unless allowable for a national bank; and |
|
|
|
Paying dividends unless allowable for a national bank. |
Three years from the date a savings association should have become or ceases to be a QTL, by
failing to meet either QTL test, the institution must dispose of any investment or not engage in
any activity unless the investment or activity is allowed for both a national bank and a savings
association. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, a savings
institution not in compliance with the QTL test is also prohibited from paying dividends and is
subject to an enforcement action for violation of the Home Owners Loan Act, as amended.
At December 31, 2010, Bank of Ruston met the requirements to be deemed a QTL.
Community Reinvestment Act. All federal savings associations have a responsibility under the
Community Reinvestment Act and related regulations to help meet the credit needs of their
communities, including low- and moderate-income neighborhoods. An institutions failure to comply
with the provisions of the Community Reinvestment Act could result in restrictions on its
activities. Bank of Ruston received a satisfactory Community Reinvestment Act rating in its most
recently completed examination.
Limitations on Transactions with Affiliates. Transactions between savings associations and
any affiliate are governed by Sections 23A and 23B of the Federal Reserve Act as made applicable to
savings associations by Section 11 of the Home Owners Loan Act. An affiliate of a savings
association includes any company or entity which controls the savings association or that is
controlled by a company that controls the savings association. In a holding company context, the
holding company of a savings association (such as Century Next Financial) and any companies which
are controlled by such holding company are affiliates of the savings association. Generally,
Section 23A limits the extent to which the savings association or its subsidiaries may engage in
covered transactions with any one affiliate to an amount equal to 10% of such associations
capital stock and surplus, and contains an aggregate limit on all such transactions with all
affiliates to an amount equal to 20% of such capital stock and surplus. Section 23B applies to
covered transactions as well as certain other transactions and requires that all transactions be
on terms substantially the same, or at least as favorable, to the savings association as those
provided to a non-affiliate. The term covered transaction includes the making of loans to,
purchase of assets from and issuance of a guarantee to an affiliate and similar transactions.
Section 23B transactions also include the provision of services and the sale of assets by a savings
association to an affiliate. In addition to the restrictions imposed by Sections 23A and 23B, a
savings association is prohibited from (i) making a loan or other extension of credit to an
affiliate, except for any affiliate which engages only in certain activities which are permissible
for bank holding companies, or (ii) purchasing or investing in any stocks, bonds, debentures, notes
or similar obligations of any affiliate, except for affiliates which are subsidiaries of the
savings association.
22
In addition, Sections 22(g) and (h) of the Federal Reserve Act as made applicable to savings
associations by Section 11 of the Home Owners Loan Act place restrictions on loans to executive
officers, directors and principal shareholders of the savings association and its affiliates.
Under Section 22(h), loans to a director, an executive officer and to a greater than 10%
shareholder of a savings association, and certain affiliated interests of either, may not exceed,
together with all other outstanding loans to such person and affiliated interests, the savings
associations loans to one borrower limit (generally equal to 15% of the associations unimpaired
capital and surplus). Section 22(h) also requires that loans to directors, executive officers and
principal shareholders be made on terms substantially the same as offered in comparable
transactions to other persons unless the loans are made pursuant to a benefit or compensation
program that (i) is widely available to employees of the association and (ii) does not give
preference to any director, executive officer or principal shareholder, or certain affiliated
interests of either, over other employees of the savings association. Section 22(h) also requires
prior board approval for certain loans. In addition, the aggregate amount of extensions of credit
by a savings association to all insiders cannot exceed the associations unimpaired capital and
surplus. Furthermore, Section 22(g) places additional restrictions on loans to executive officers.
Bank of Ruston currently is subject to Section 22(g) and (h) of the Federal Reserve Act and at
December 31, 2010, was in compliance with the above restrictions.
Anti-Money Laundering. All financial institutions, including savings and loan associations,
are subject to federal laws that are designed to prevent the use of the U.S. financial system to
fund terrorist activities. Financial institutions operating in the United States must develop
anti-money laundering compliance programs, due diligence policies and controls to ensure the
detection and reporting of money laundering. Such compliance programs are intended to supplement
compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and
the Office of Foreign Assets Control Regulations. Bank of Ruston has established policies and
procedures to ensure compliance with these provisions.
Federal Home Loan Bank System. Bank of Ruston is a member of the Federal Home Loan Bank of
Dallas, which is one of 12 regional Federal Home Loan Banks that administers the home financing
credit function of savings institutions. Each Federal Home Loan Bank serves as a reserve or
central bank for its members within its assigned region. It is funded primarily from proceeds
derived from the sale of consolidated obligations of the Federal Home Loan Bank System. It makes
loans to members (i.e., advances) in accordance with policies and procedures established by the
board of directors of the Federal Home Loan Bank. At December 31, 2010, Bank of Ruston had
advances in the amount of $415,000 from the Federal Home Loan Bank and $41.2 million available on
its credit line with the Federal Home Loan Bank.
As a member, Bank of Ruston is required to purchase and maintain stock in the Federal Home
Loan Bank of Dallas in an amount equal to at least 1.0% of its aggregate unpaid residential
mortgage loans or similar obligations at the beginning of each year. At December 31, 2010, Bank of
Ruston had $280,000 in Federal Home Loan Bank stock, which was in compliance with this requirement.
The Federal Home Loan Banks are required to provide funds for the resolution of troubled
savings institutions and to contribute to affordable housing programs through direct loans or
interest subsidies on advances targeted for community investment and low- and moderate-income
housing projects. These contributions have adversely affected the level of Federal Home Loan Bank
dividends paid in the past and could do so in the future. These contributions also could have an
adverse effect on the value of Federal Home Loan Bank stock in the future.
Federal Reserve System. The Federal Reserve Board requires all depository institutions to
maintain reserves against their transaction accounts (primarily NOW and Super NOW checking
accounts) and non-personal time deposits. The required reserves must be maintained in the form of
vault cash or an account at a Federal Reserve Bank. At December 31, 2010, Bank of Ruston had met
its reserve requirement.
23
TAXATION
Federal Taxation
General. Century Next Financial and Bank of Ruston are subject to federal income taxation in
the same general manner as other corporations with some exceptions listed below. The following
discussion of federal, state and local income taxation is only intended to summarize certain
pertinent income tax matters and is not a comprehensive description of the applicable tax rules.
Bank of Rustons federal and state income tax returns for taxable years through December 31, 2005
have been closed for purposes of examination by the Internal Revenue Service.
Century Next Financial files a consolidated federal income tax return with Bank of Ruston.
Accordingly, any cash distributions made by Century Next Financial to its shareholders would be
treated as cash dividends and not as a non-taxable return of capital to shareholders for federal
and state tax purposes.
Method of Accounting. For federal income tax purposes, Bank of Ruston reports income and
expenses on the accrual method of accounting and uses a December 31 tax year for filing its federal
income tax return.
Bad Debt Reserves. The Small Business Job Protection Act of 1996 eliminated the use of the
reserve method of accounting for bad debt reserves by savings institutions, effective for taxable
years beginning after 1995. Prior to that time, Bank of Ruston was permitted to establish a
reserve for bad debts and to make additions to the reserve. These additions could, within
specified formula limits, be deducted in arriving at taxable income. As a result of the Small
Business Job Protection Act of 1996, savings associations must use the specific charge-off method
in computing their bad debt deduction beginning with their 1996 federal tax return. In addition,
federal legislation required the recapture over a six year period of the excess of tax bad debt
reserves at December 31, 1995 over those established as of December 31, 1987.
Taxable Distributions and Recapture. Prior to the Small Business Job Protection Act of 1996,
bad debt reserves created prior to January 1, 1988 were subject to recapture into taxable income if
Bank of Ruston failed to meet certain thrift asset and definitional tests. New federal legislation
eliminated these savings association related recapture rules. However, under current law, pre-1988
reserves remain subject to recapture should Bank of Ruston make certain non-dividend distributions
or cease to maintain a bank charter.
At December 31, 2010, the total federal pre-1988 reserve was approximately $1.2 million. The
reserve reflects the cumulative effects of federal tax deductions by Bank of Ruston for which no
federal income tax provisions have been made.
Alternative Minimum Tax. The Internal Revenue Code imposes an alternative minimum tax at a
rate of 20% on a base of regular taxable income plus certain tax preferences. The alternative
minimum tax is payable to the extent such alternative minimum tax income is in excess of the
regular income tax. Net operating losses, of which Bank of Ruston has none, can offset no more
than 90% of alternative minimum taxable income. Certain payments of alternative minimum tax may be
used as credits against regular tax liabilities in future years. Bank of Ruston has not been
subject to the alternative minimum tax or any such amounts available as credits for carryover.
Net Operating Loss Carryovers. For net operating losses in years beginning after August 5,
1997, net operating losses can be carried back to the two years preceding the loss year and forward
to the 20 years following the loss year. At December 31, 2010, Bank of Ruston had no net operating
loss carry forwards for federal income tax purposes.
Corporate Dividends-Received Deduction. Century Next Financial may exclude from its income
100% of dividends received from Bank of Ruston as a member of the same affiliated group of
corporations. The corporate dividends received deduction is 80% in the case of dividends received
from corporations which a corporate recipient owns less than 80%, but at least 20% of the
distribution corporation. Corporations which own less than 20% of the stock of a corporation
distributing a dividend may deduct only 70% of dividends received.
24
State and Local Taxation
Century Next Financial is subject to the Louisiana Corporation Income Tax based on our
Louisiana taxable income. The Corporation Income Tax applies at graduated rates from 4% upon the
first $25,000 of Louisiana taxable income to 8% on all Louisiana taxable income in excess of
$200,000. For these purposes, Louisiana taxable income means net income which is earned by us
within or derived from sources within the State of Louisiana, after adjustments permitted under
Louisiana law, including a federal income tax deduction. In addition, Bank of Ruston is subject to
the Louisiana Shares Tax which is imposed on the assessed value of Bank of Rustons capital. The
formula for deriving the assessed value is to apply the applicable rate to the sum of:
|
(a) |
|
20% of our capitalized earnings, plus |
|
(b) |
|
80% of our taxable stockholders equity, minus |
|
(c) |
|
50% of our real and personal property assessment. |
Various items may also be subtracted in calculating a companys capitalized earnings.
Not applicable.
|
|
|
Item 1B. |
|
Unresolved Staff Comments. |
Not applicable.
Properties
The Company conducts business from Bank of Rustons main office and one full-service banking
office. The following table sets forth the net book value of the land, building and leasehold
improvements and certain other information with respect to the our offices at December 31, 2010.
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
Net Book |
|
|
|
|
|
|
|
|
Date of Lease |
|
|
Value of |
|
|
Amount of |
|
Description/Address |
|
Leased/Owned |
|
Expiration |
|
|
Property |
|
|
Deposits |
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Main Office: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
505 North Vienna
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ruston, Louisiana 71270 |
|
Owned |
|
|
N/A |
|
|
$ |
1,991 |
|
|
$ |
70,015 |
|
|
Branch Office: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2109 Farmerville Highway
Ruston, Louisiana 71270 |
|
Owned |
|
|
N/A |
|
|
|
1,697 |
|
|
|
7,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
$ |
3,688 |
|
|
$ |
77,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 3. |
|
Legal Proceedings. |
The Company is not presently involved in any legal proceedings of a material nature. From
time to time, we are a party to legal proceedings incidental to our business to enforce our
security interest in collateral pledged to secure loans made by Bank of Ruston.
|
|
|
Item 4. |
|
(Removed and Reserved). |
25
PART II
|
|
|
Item 5. |
|
Market for the Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities. |
(a) Century Next Financials common stock is quoted on the OTC Bulletin Board under the symbol
CTUY. The common stock was issued at a price of $10.00 per share in connection with the Banks
mutual to stock conversion and the initial public offering of the Companys common stock and
commenced trading on October 1, 2010. As of March 29, 2011, there were 1,058,000 shares of common
stock outstanding, held by approximately 189 shareholders of record, not including the number of
persons or entities whose stock is held in nominee or street name through various brokerage firms
and banks.
Presented below is the high and low bid information for Century Next Financials common stock
for the quarter ended December 31, 2010. The over-the-counter market quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions. Information relating to bid quotations has been obtained from the
Nasdaq Stock Market, Inc. The Company has not declared or paid any cash dividends.
|
|
|
|
|
|
|
|
|
Fiscal 2010 |
|
|
|
|
|
|
Quarter Ended: |
|
High Bid |
|
|
Low Bid |
|
December 31, 2010 |
|
$ |
12.00 |
|
|
$ |
11.00 |
|
September 30, 2010 |
|
|
N/A |
|
|
|
N/A |
|
June 30, 2010 |
|
|
N/A |
|
|
|
N/A |
|
March 31, 2010 |
|
|
N/A |
|
|
|
N/A |
|
(b) Not applicable.
(c) Not applicable.
|
|
|
Item 6. |
|
Selected Financial Data. |
Set forth below is selected summary historical financial and other data of Century Next
Financial Corporation. We have prepared this information using the consolidated financial
statements of Century Next Financial and its subsidiary, Bank of Ruston for the two years ended
December 31, 2010. When you read this summary historical financial data, it is important that you
also read the historical financial statements and related notes contained in Item 8 of this Form
10-K, as well as Managements Discussion and Analysis of Financial Condition and Results of
Operations.
|
|
|
|
|
|
|
|
|
|
|
At December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
Selected Financial Data: |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
98,115 |
|
|
$ |
85,875 |
|
Cash and cash equivalents |
|
|
7,581 |
|
|
|
4,674 |
|
Investment securities, available for sale |
|
|
7,408 |
|
|
|
1,384 |
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
Held to maturity |
|
|
137 |
|
|
|
171 |
|
Available for sale |
|
|
4,018 |
|
|
|
5,703 |
|
FHLB stock |
|
|
280 |
|
|
|
280 |
|
Loans receivable, net |
|
|
71,612 |
|
|
|
66,998 |
|
Deposits |
|
|
77,895 |
|
|
|
75,943 |
|
FHLB advances |
|
|
415 |
|
|
|
|
|
Total equity |
|
|
18,308 |
|
|
|
8,476 |
|
26
|
|
|
|
|
|
|
|
|
|
|
At or For the Year Ended |
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(Dollars in thousands) |
|
Selected Operating Data: |
|
|
|
|
|
|
|
|
Total interest income |
|
$ |
4,615 |
|
|
$ |
4,406 |
|
Total interest expense |
|
|
1,006 |
|
|
|
1,298 |
|
|
|
|
|
|
|
|
Net interest income |
|
|
3,609 |
|
|
|
3,108 |
|
Provision for loan losses |
|
|
43 |
|
|
|
16 |
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses |
|
|
3,566 |
|
|
|
3,092 |
|
Total non-interest income |
|
|
900 |
|
|
|
773 |
|
Total non-interest expense |
|
|
3,475 |
|
|
|
3,219 |
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
991 |
|
|
|
646 |
|
Income taxes |
|
|
335 |
|
|
|
182 |
|
|
|
|
|
|
|
|
Net income |
|
$ |
656 |
|
|
$ |
464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Operating Ratios (1) |
|
|
|
|
|
|
|
|
Average yield on interest-earning assets |
|
|
5.43 |
% |
|
|
5.88 |
% |
Average rate on interest-bearing liabilities |
|
|
1.38 |
|
|
|
1.97 |
|
Average interest rate spread(2) |
|
|
4.05 |
|
|
|
3.91 |
|
Net interest margin(2) |
|
|
4.25 |
|
|
|
4.15 |
|
Average interest-earning assets to average
interest-bearing liabilities |
|
|
116.50 |
|
|
|
114.20 |
|
Net interest income after provision for loan
losses to non-interest expense |
|
|
102.62 |
|
|
|
96.05 |
|
Total non-interest expense to average assets |
|
|
3.75 |
|
|
|
3.92 |
|
Efficiency ratio(3) |
|
|
77.07 |
|
|
|
82.94 |
|
Return on average assets |
|
|
0.71 |
|
|
|
0.57 |
|
Return on average equity |
|
|
6.30 |
|
|
|
5.63 |
|
Average equity to average assets |
|
|
11.22 |
% |
|
|
10.04 |
% |
|
|
|
|
|
|
|
|
|
Asset Quality Ratios:(4) |
|
|
|
|
|
|
|
|
Non-performing loans as a percent of
total loans receivable(5) |
|
|
1.08 |
% |
|
|
0.37 |
% |
Non-performing assets as a percent of
total assets(5) |
|
|
0.81 |
% |
|
|
0.29 |
% |
Allowance for loan losses as a percent of
non-performing loans |
|
|
26.36 |
% |
|
|
70.97 |
% |
Net charge-offs (recoveries) to average loans
receivable |
|
|
0.03 |
% |
|
|
0.04 |
% |
|
|
|
|
|
|
|
|
|
Capital Ratios:(6) |
|
|
|
|
|
|
|
|
Tier 1 capital ratio |
|
|
14.60 |
% |
|
|
9.79 |
% |
Tier 1 risk-based capital ratio |
|
|
21.09 |
% |
|
|
13.65 |
% |
Total risk-based capital ratio |
|
|
21.36 |
% |
|
|
13.93 |
% |
|
Other Data: |
|
|
|
|
|
|
|
|
Banking offices |
|
|
2 |
|
|
|
2 |
|
|
|
|
(1) |
|
With the exception of end of period ratios, all ratios are based on average monthly
balances during the indicated periods. Ratios for the three month periods are annualized. |
|
(2) |
|
Average interest rate spread represents the difference between the average yield on
interest-earning assets and the average rate paid on interest-bearing liabilities, and net
interest margin represents net interest income as a percentage of average interest-earning
assets. |
|
(3) |
|
The efficiency ratio represents the ratio of non-interest expense divided by the sum of net
interest income and non-interest income. |
|
(4) |
|
Asset quality ratios are end of period ratios, except for net charge-offs to average loans
receivable. |
|
(5) |
|
Non-performing loans consist of all loans 90 days or more past due and all non-accruing
loans. Non-performing assets consist of non-performing loans and other repossessed assets. |
|
(6) |
|
Capital ratios are end of period ratios. |
27
|
|
|
Item 7. |
|
Managements Discussion and Analysis of Financial Condition and Results of
Operations. |
Overview
Century Next Financials profitability depends primarily on net interest income, which is the
difference between interest income earned on interest-earning assets, principally loans, and
interest expense paid on interest-bearing liabilities, principally deposits. Net interest income
is dependent upon the level of interest rates and the extent to which such rates are changing.
Century Next Financials profitability also depends, to a lesser extent, on interest-earning
deposits in other institutions, non-interest income, borrowings from the Federal Home Loan Bank of
Dallas, provision for loan losses, non-interest expenses and federal income taxes.
For our portfolio loans, we originate principally short-term loans of three to five years
which amortize over longer periods up to 30 years and require the payment of principal at stated
maturity. Most of such loans are refinanced with Bank of Ruston at the end of their term due to a
renewal process with reduced fees and costs. It has been our policy to renew such loans at a rate
no greater than 2% over the prior rate.
We sell a substantial amount of our long-term, fixed rate single-family residential mortgage
loans into the secondary market, although we also retain some of such loans for portfolio. In
recent years, we have emphasized commercial real estate lending and lines of credit which amounted
to $12.9 million, or 17.9% of our total loans, at December 31, 2010. Typically, single-family loans
involve a lower degree of risk and carry a lower yield than commercial real estate, construction,
commercial business and consumer loans. Our loans are primarily funded by certificates of deposit,
which typically have a higher interest rate than savings accounts. At December 31, 2010,
certificates of deposit amounted to $38.7 million, or 49.7% of total deposits. Our certificates of
deposit decreased $5.6 million at December 31, 2010 compared to the prior year, while our
transaction accounts increased $7.5 million over the same period as we implemented our strategy to
grow retail core deposits. We had $415,000 in borrowings outstanding from the Federal Home Loan
Bank of Dallas as of December 31, 2010, compared to none at December 31, 2009. Although we will
attempt to diversify into other deposit products in order to improve our net interest margin, we
anticipate that certificates of deposit will continue to be a primary source of funding for our
assets in the near term.
Our results of operations are also significantly affected by general economic and competitive
conditions, particularly with respect to changes in interest rates, government policies and actions
of regulatory authorities. Future changes in applicable law, regulations or government policies may
materially affect our financial condition and results of operations.
Business Strategy
Our business strategy is focused on operating a growing and profitable community-oriented
financial institution. Below are certain of the highlights of our business strategy:
|
|
|
Growing Our Loan Portfolio. We plan to expand our origination of commercial real
estate loans secured by owner-occupied commercial real estate and investment real
estate with strong guarantor support. We plan to continue to emphasize originating
short-term one-to four family residential loans for portfolio and selling a significant
amount of our one-to four-family residential loans having longer terms into the
secondary market. We plan to build on our banking relationships with small- and
medium-sized businesses in our local market area. As a local community bank with a
senior management team that has significant commercial banking experience in Lincoln
Parish and the contiguous communities, Bank of Ruston is positioned to more effectively
meet the commercial banking needs of local businesses that are currently underserved by
larger financial institutions that place more of an emphasis on developing large
commercial banking relationships. Bank of Rustons ability to provide small- and
medium-sized commercial banking customers with local decision-making and superior
service will be a core marketing focus in competing for commercial real estate loans
and deposits. We will continue to pursue residential lending which we expect will also
be a potential source of core deposit growth in our local market and originating loans
throughout the state of Louisiana. |
28
|
|
|
Growing our Retail Core Deposits. We plan to grow our retail deposits by
emphasizing transactional deposit accounts. According to the market share report of
the Federal Deposit Insurance Corporation, as of June 30, 2010, the most recent date
for which information is available, Bank of Ruston had 9.7% of the market in Lincoln
Parish which was the fourth largest, following one bank that operates nationally and
two regional banks. Growth of retail core deposits will be pursued through offering
products and services that meet the full service banking needs of all age groups and
developing more of a sales culture in the branches. Advertising, promotions and
offering attractive rates on certain transaction accounts may also be utilized as
means to increase retail core deposits. |
|
|
|
Maintaining High Asset Quality. We continue to maintain high levels of asset
quality. At December 31, 2010, we had $774,000 of non-performing loans in our
portfolio and no real estate acquired in foreclosure. We attribute our high asset
quality to our prudent and conservative underwriting practices, which include low
loan-to-value ratios, personal guarantees, cross-collateralization and tailoring loan
terms for the individual customer. We intend to maintain high asset quality, even as we
grow Bank of Ruston. |
|
|
|
Continuing to Provide Exceptional Customer Service. As a community oriented savings
bank, we take pride in providing exceptional customer service as a means to attract and
retain customers. We deliver personalized service to our customers that distinguishes
us from the large regional banks operating in our market area. Our management team has
strong ties to, and deep roots in, the community. We believe that we know our
customers banking needs and can respond quickly to address them. |
Critical Accounting Policies
In reviewing and understanding financial information for Century Next Financial, you are
encouraged to read and understand the significant accounting policies used in preparing our
financial statements. These policies are described in Note 1 of the notes to our consolidated
financial statements. The accounting and financial reporting policies of Century Next Financial
conform to accounting principles generally accepted in the United States of America and to general
practices within the banking industry. Accordingly, the financial statements require certain
estimates, judgments, and assumptions, which are believed to be reasonable, based upon the
information available. These estimates and assumptions affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses
during the periods presented. The following accounting policies comprise those that management
believes are the most critical to aid in fully understanding and evaluating our reported financial
results. These policies require numerous estimates or economic assumptions that may prove
inaccurate or may be subject to variations which may significantly affect our reported results and
financial condition for the period or in future periods.
Allowance for Loan Losses. The allowance for loan losses is maintained at a level to provide
for probable credit losses related to specifically identified loans and for losses inherent in the
loan portfolio that have been incurred as of the balance sheet date. The allowance for loan losses
is comprised of specific allowances and a general allowance. Specific provisions are assessed for
each loan that is reviewed for impairment or for which a probable loss has been identified. The
allowance related to loans that are identified as impaired is based on discounted expected future
cash flows using the loans initial effective interest rate, the observable market value of the
loan, or the estimated fair value of the collateral for certain collateral dependent loans.
Factors contributing to the determination of specific provisions include the financial condition of
the borrower, changes in the value of pledged collateral and general economic conditions. General
allowances are established based on historical charge-offs considering factors that include risk
rating, concentrations and loan type. For the general allowance, management also considers trends
in delinquencies and non-accrual loans, concentrations, volatility of risk ratings and the evolving
mix in terms of collateral, relative loan size and the degree of seasoning within the various loan
products.
29
Our allowance levels may be impacted by changes in underwriting standards, credit
administration and collection policies, regulation and other factors which affect the credit
quality and collectability of the loan portfolio also impact the allowance levels. The allowance
for loan losses is based on managements estimate of probable credit losses inherent in the loan
portfolio; actual credit losses may vary from the current estimate. The allowance for loan losses
is reviewed periodically, taking into consideration the risk characteristics of the loan portfolio,
past charge-off experience, general economic conditions and other factors that warrant current
recognition. As adjustments to the allowance for loan losses become necessary, they are reflected
as a provision for loan losses in current-period earnings. Actual loan charge-offs are deducted
from and subsequent recoveries of previously charged-off loans are added to the allowance.
Other-Than-Temporary Impairment. We review our investment portfolio on a quarterly basis for
indications of impairment. This review includes analyzing the length of time and the extent to
which the fair value has been lower than the cost, the financial condition and near-term prospects
of the issuer including any specific events that may influence the operations of the issuer, and
the intent and ability to hold the investment for a period of time sufficient to allow for any
anticipated recovery in the market. Inherent in this analysis is a certain amount of imprecision
in the judgment used by management.
We recognize credit-related other-than-temporary impairment on debt securities in earnings
while noncredit-related other-than-temporary impairment on debt securities not expected to be sold
is recognized in accumulated other comprehensive income. We assess whether the credit loss existed
by considering whether (a) we have the intent to sell the security, (b) it is more likely than not
that we will be required to sell the security before recovery, or (c) we do not expect to recover
the entire amortized cost basis of the security. We may bifurcate the other-than-temporary
impairment on securities not expected to be sold or where the entire amortized cost of the security
is not expected to be recovered into the components representing credit loss and the component
representing loss related to other factors. The portion of the fair value decline attributable to
credit loss is recognized through earnings.
Corporate debt securities are evaluated for other-than-temporary impairment by determining
whether it is probable that an adverse change in estimated cash flows has occurred. Determining
whether there has been an adverse change in estimated cash flows involves the calculation of the
present value of remaining cash flows compared to previously projected cash flows. We consider the
discounted cash flow analysis to be our primary evidence when determining whether credit-related
other-than-temporary impairment exists on corporate debt securities.
Income Taxes. Deferred income tax assets and liabilities are determined using the liability
(or balance sheet) method. Under this method, the net deferred tax asset or liability is
determined based on the tax effects of the temporary differences between the book and tax bases of
the various assets and liabilities and gives current recognition to changes in tax rates and laws.
Realizing our deferred tax assets principally depends upon our achieving projected future taxable
income. We may change our judgments regarding future profitability due to future market conditions
and other factors. We may adjust our deferred tax asset balances if our judgments change.
Use of Estimates. In preparing the financial statements, the Company is required to make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. The financial statements
reflect all adjustments that are, in the opinion of management, necessary for a fair statement of
the Companys financial condition, results of operations, changes in stockholders equity and cash
flows for the periods presented. These adjustments are of a normal recurring nature and include
appropriate estimated provisions. Certain amounts reported in prior periods have been reclassified
to conform to the current period presentation. Such reclassifications had no effect on previously
reported equity or net income.
Comparison of Financial Condition at December 31, 2010 and December 31, 2009
Century Next Financials total assets increased $12.2 million, or 14.3%, to $98.1 million at
December 31, 2010 compared to $85.9 million at December 31, 2009. This increase was primarily due
to increases in loans receivable, net, of $4.6 million, cash and cash equivalents of $2.9 million
and investment securities of $4.3 million. The increases in total assets were made possible in large part by the $9.8 million net proceeds
raised in the Companys stock offering completed on September 30, 2010.
30
Loans receivable, net, increased $4.6 million, or 6.9%, at December 31, 2010 compared to
December 31, 2009. The increase in loans receivable, net was due primarily to an increase in land
loans of $2.6 million, commercial business loans of $1.5 million and consumer non-real estate loans
of $1.4 million. Home equity lines of credit decreased $447,000 and residential construction loans
decreased $588,000.
Cash and cash equivalents increased $2.9 million or 62.2% to $7.6 million at December 31, 2010
compared to $4.7 million at December 31, 2009 primarily as a result of normal deposit inflows and
the proceeds of the Companys stock offering. Investment securities increased $4.3 million, or
59.3%, at December 31, 2010 from $7.3 million at December 31, 2009. The increase in investment
securities was due primarily to purchases of U.S. Government and agency obligations during fiscal
2010, partially offset by payments received through the maturities of securities.
Total liabilities increased $2.4 million or 3.1% to $79.8 million at December 31, 2010
compared to $77.4 million at December 31, 2009, due primarily to a net increase in interest-bearing
deposits of $2.0 million. The Company had FHLB advances in the amount of $415,000 outstanding at
December 31, 2010, compared to none at December 31, 2009.
Total equity increased $9.8 million to $18.3 million at December 31, 2010, compared
to $8.5 million at December 31, 2009, primarily due to the $9.8 million in net proceeds raised in
the Companys stock offering completed on September 30, 2010, offset partially by the purchase of
Employee Stock Ownership Plan Shares for $667,000. Also contributing to the increase in
shareholders equity at December 31, 2010, were an increase in the Companys accumulated other
income of $3,000 and net income of $656,000 for the year ended December 31, 2010.
The increase in loans receivable, net, at December 31, 2010 compared to December 31, 2009 was
funded by the increase in deposits of $2.0 million and in part by the net proceeds raised in the
Companys stock offering. At December 31, 2010, Bank of Ruston had $588,000 of securities sold
under agreements to repurchase compared to $907,000 at December 31, 2009.
The increase in total deposits of $2.0 million or 2.6% from December 31, 2009 to December 31,
2010 was due to increases in checking and money market accounts. Checking accounts and money
market accounts increased $2.9 million, or 13.8%, and $4.5 million, or 113.7%, respectively, at
December 31, 2010 compared to December 31, 2009. Certificate of deposit accounts decreased by $5.6
million, or 12.6%, at December 31, 2010 compared to December 31, 2009.
Comparison of Operating Results for the Years Ended December 31, 2010 and 2009
Century Next Financials net income amounted to $656,000 for the year ended December 31, 2010,
an increase of $192,000 or 41.4% compared to net income of $464,000 for the year ended December 31,
2009. This increase was primarily due to an increase in interest income of $209,000 and a decrease
in interest expense of $292,000.
Net Interest Income. Net interest income amounted to $3.6 million for the year ended December
31, 2010 compared to $3.1 million for the year ended December 31, 2009. The $501,000, or 16.1%,
increase was primarily due to an increase of $209,000, or 4.7%, in total interest income as a
result of an increase in volume of interest earning assets and a decrease of $292,000, or 22.5%, in
interest expense on borrowings and deposits due to an overall decline in the average cost of funds.
The average interest rate spread increased from 3.91% for the year ended December 31, 2009 to
4.05% for the year ended December 31, 2010 while average interest-earning assets increased from
$75.0 million to $85.0 million during the same periods. Average interest-earning assets to average
interest-bearing liabilities increased from 114.20% for the year ended December 31, 2009 to 116.50%
for the year ended December 31, 2010. The increase in the average interest rate spread reflects
the decrease in average rate paid on interest-bearing liabilities
from 1.97% in fiscal 2009 to 1.38% in fiscal 2010 compared to a decrease in the average yield on
interest earning assets from 5.88% in 2009 to 5.43% in 2010. Net interest margin increased 10
basis points from 4.15% to 4.25% at December 31, 2009 and 2010, respectively, primarily due to a
decrease of 59 basis points in the average rate paid on interest-bearing liabilities compared to a
decrease of 45 basis points in the average yield on interest-earning assets for the periods.
31
Interest income increased by $209,000, or 4.7%, to $4.6 million for the year ended December
31, 2010 compared to the year ended December 31, 2009. Such increase was primarily due to an
increase in average balance of loans receivable from $64.9 million for the year ended December 31,
2009 to $71.0 million for the year ended December 31, 2010, which was offset in part by the
decrease in the average yield on loans receivable. The decrease in the average yield on loans from
6.45% in fiscal 2009 to 6.25% in fiscal 2010 reflects changes in the market rates of interest
during fiscal 2010.
Interest expense decreased by $292,000 or 22.5%, to $1.0 million for the year ended December
31, 2010 compared to $1.3 million for the year ended December 31, 2009 primarily as a result of a
decrease in the average rate paid on certificate of deposit and savings accounts which offset the
increase in average balance of such accounts. Such decrease in average rate was due to a decline in
cost of certificates of deposit as higher cost certificates of deposit repriced at a lower rate
during the fiscal year.
Non-Interest Income. Non-interest income, which includes fees and service charges, realized
gains and losses on investments and other operating income, amounted to $900,000 for the year ended
December 31, 2010, an increase of $127,000, or 16.4% compared to non-interest income of $773,000
for the year ended December 31, 2009. The increase was due primarily to an increase of $154,000 in
loan fees and gains on loans held for sale, and a $53,000 gain on sale of fixed assets as a result
of the sale of excess land at the site of our branch office opened in February, 2009, partially
offset by a $78,000 decrease in other operating income as a result of a $91,000 decrease in
realized income on life insurance which occurred in the year ended December 31, 2009, but not in
2010.
Non-Interest Expense. Non-interest expense increased by $256,000, or 8.0%, to $3.5 million for
the year ended December 31, 2010, compared to $3.2 million for the year ended December 31, 2009.
The increase was primarily the result of a $155,000 increase in compensation and employee benefits
expense, a $17,000 increase in occupancy expense, a $30,000 increase in service bureau expense, a
$20,000 increase in advertising expense, and a $85,000 increase in other operating expense. The
increase in other operating expense was due to a $26,000 increase in legal and other professional
expense and a $59,000 increase in other expense.
Income Tax Expense. Income tax expense amounted to $335,000 and $182,000 for the fiscal years
ended December 31, 2010 and 2009, respectively. Our effective tax rate was 33.7% and 28.2% for
fiscal 2010 and 2009, respectively.
32
Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following table
shows for the periods indicated the total dollar amount of interest from average interest-earning
assets and the resulting yields, as well as the interest expense on average interest-bearing
liabilities, expressed both in dollars and rates, and the net interest margin. Tax-exempt income
and yields have not been adjusted to a tax-equivalent basis. All average balances are based on
monthly balances. Management does not believe that the monthly averages differ significantly from
what the daily averages would be. The table also reflects the yields on Century Next Financials
interest-earning assets on costs of interest-bearing liabilities at December 31, 2010 and 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
Average |
|
|
|
|
|
|
Yield/ |
|
|
Average |
|
|
|
|
|
|
Yield/ |
|
|
|
Balance |
|
|
Interest |
|
|
Rate(1) |
|
|
Balance |
|
|
Interest |
|
|
Rate(1) |
|
|
|
(Dollars in thousands) |
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable(1) |
|
$ |
70,964 |
|
|
$ |
4,436 |
|
|
|
6.25 |
% |
|
$ |
64,911 |
|
|
$ |
4,188 |
|
|
|
6.45 |
% |
Investment securities |
|
|
6,789 |
|
|
|
178 |
|
|
|
2.62 |
|
|
|
7,088 |
|
|
|
217 |
|
|
|
3.07 |
|
Other interest-earning assets |
|
|
7,199 |
|
|
|
1 |
|
|
|
0.01 |
|
|
|
2,969 |
|
|
|
1 |
|
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
|
|
84,952 |
|
|
|
4,615 |
|
|
|
5.43 |
% |
|
|
74,968 |
|
|
|
4,406 |
|
|
|
5.88 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-earning assets |
|
|
7,802 |
|
|
|
|
|
|
|
|
|
|
|
6,976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
92,754 |
|
|
|
|
|
|
|
|
|
|
$ |
81,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW and money market accounts |
|
|
28,988 |
|
|
|
151 |
|
|
|
0.52 |
% |
|
|
25,370 |
|
|
|
197 |
|
|
|
0.78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of deposit |
|
|
42,853 |
|
|
|
842 |
|
|
|
1.96 |
|
|
|
40,255 |
|
|
|
1,096 |
|
|
|
2.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing deposits |
|
|
71,841 |
|
|
|
993 |
|
|
|
1.38 |
|
|
|
65,625 |
|
|
|
1,293 |
|
|
|
1.97 |
|
FHLB advances and other borrowings |
|
|
1,077 |
|
|
|
13 |
|
|
|
1.21 |
|
|
|
1,070 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
|
|
72,918 |
|
|
|
1,006 |
|
|
|
1.38 |
% |
|
|
66,695 |
|
|
|
1,298 |
|
|
|
1.97 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing liabilities |
|
|
9,425 |
|
|
|
|
|
|
|
|
|
|
|
7,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
82,343 |
|
|
|
|
|
|
|
|
|
|
|
74,676 |
|
|
|
|
|
|
|
|
|
Equity |
|
|
10,411 |
|
|
|
|
|
|
|
|
|
|
|
6,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
92,754 |
|
|
|
|
|
|
|
|
|
|
$ |
81,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets |
|
$ |
12,034 |
|
|
|
|
|
|
|
|
|
|
$ |
8,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income; average interest rate spread |
|
|
|
|
|
$ |
3,609 |
|
|
|
4.05 |
% |
|
|
|
|
|
$ |
3,108 |
|
|
|
3.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin(2) |
|
|
|
|
|
|
|
|
|
|
4.25 |
% |
|
|
|
|
|
|
|
|
|
|
4.15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average interest-earning assets to
average interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
116.50 |
% |
|
|
|
|
|
|
|
|
|
|
114.20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Calculated net of deferred fees and discounts, loans in process and allowance for loan
losses. |
|
(2) |
|
Equals net interest income divided by average interest-earning assets. |
33
Rate/Volume Analysis. The following table shows the extent to which changes in interest
rates and changes in volume of interest-earning assets and interest-bearing liabilities affected
our interest income and expense during the periods indicated. For each category of
interest-earning assets and interest-bearing liabilities, information is provided on changes
attributable to (1) changes in rate, which is the change in rate multiplied by prior year volume,
and (2) changes in volume, which is the change in volume multiplied by prior year rate. The
combined effect of changes in both rate and volume has been allocated proportionately to the change
due to rate and the change due to volume.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
Year Ended December 31, |
|
|
|
2010 compared to 2009 |
|
|
2009 compared to 2008 |
|
|
|
Increase (Decrease) |
|
|
Total |
|
|
Increase (Decrease) |
|
|
Total |
|
|
|
Due to |
|
|
Increase |
|
|
Due to |
|
|
Increase |
|
|
|
Rate |
|
|
Volume |
|
|
(Decrease) |
|
|
Rate |
|
|
Volume |
|
|
(Decrease) |
|
|
|
(In thousands) |
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable |
|
$ |
(124 |
) |
|
$ |
372 |
|
|
$ |
248 |
|
|
$ |
(192 |
) |
|
$ |
312 |
|
|
$ |
120 |
|
Investment securities |
|
|
(30 |
) |
|
|
(9 |
) |
|
|
(39 |
) |
|
|
(103 |
) |
|
|
25 |
|
|
|
(78 |
) |
Other interest-earning assets |
|
|
(1 |
) |
|
|
1 |
|
|
|
|
|
|
|
(52 |
) |
|
|
(33 |
) |
|
|
(85 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
|
(155 |
) |
|
|
364 |
|
|
|
209 |
|
|
|
(347 |
) |
|
|
304 |
|
|
|
(43 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW and money
market accounts |
|
|
(81 |
) |
|
|
35 |
|
|
|
(46 |
) |
|
|
(31 |
) |
|
|
23 |
|
|
|
(8 |
) |
Certificates of deposit |
|
|
(331 |
) |
|
|
77 |
|
|
|
(254 |
) |
|
|
(491 |
) |
|
|
74 |
|
|
|
(417 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
|
|
(412 |
) |
|
|
112 |
|
|
|
(300 |
) |
|
|
(522 |
) |
|
|
97 |
|
|
|
(425 |
) |
FHLB advances and other
borrowings |
|
|
8 |
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
(4 |
) |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
(404 |
) |
|
|
112 |
|
|
|
(292 |
) |
|
|
(522 |
) |
|
|
93 |
|
|
|
(429 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in net
interest income |
|
$ |
249 |
|
|
$ |
252 |
|
|
$ |
501 |
|
|
$ |
175 |
|
|
$ |
211 |
|
|
$ |
386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Loan Losses. The allowance for loan losses is established through a
provision for loan losses charged to earnings as losses are estimated to have occurred in our loan
portfolio. The allowance for loan losses is maintained at a level to provide for probable credit
losses related to specifically identified loans and for losses inherent in the loan portfolio that
have been incurred as of the balance sheet date. The allowance for loan losses is comprised of
specific allowances and a general allowance.
Specific provisions are assessed for each loan that is reviewed for impairment or for which a
probable loss has been identified. The allowance related to loans that are identified as impaired
is based on discounted expected future cash flows using the loans initial effective interest rate,
the observable market value of the loan, or the estimated fair value of the collateral for certain
collateral dependent loans. Factors contributing to the determination of specific provisions
include the financial condition of the borrower, changes in the value of pledged collateral and
general economic conditions. General allowances are established based on historical charge-offs
considering factors that include risk rating, concentrations and loan type. For the general
allowance, management also considers trends in delinquencies and non-accrual loans, concentrations,
volatility of risk ratings and the evolving mix in terms of collateral, relative loan size and the
degree of seasoning within the various loan products.
Changes in underwriting standards, credit administration and collection policies, regulation
and other factors which affect the credit quality and collectability of the loan portfolio also
impact the allowance levels. The allowance for loan losses is based on managements estimate of
probable credit losses inherent in the loan portfolio; actual credit losses may vary from the
current estimate. The allowance for loan losses is reviewed periodically, taking into
consideration the risk characteristics of the loan portfolio, past charge-off experience, general
economic conditions and other factors that warrant current recognition. As adjustments to the
allowance for loan losses become necessary, they are reflected as a provision for loan losses in
current-period earnings. Actual loan charge-offs are deducted from and subsequent recoveries of
previously charged-off loans are added to the allowance.
Loan loss provisions of $43,000 were made to the allowance during the year ended December 31,
2010 compared to a provision of $16,000 in fiscal 2009. To the best of managements knowledge, the
allowance is maintained at a level believed to cover all known and inherent losses in the loan
portfolio, both probable and reasonable to estimate.
34
Exposure to Changes in Interest Rates
Bank of Rustons ability to maintain net interest income depends upon its ability to earn a
higher yield on assets than the rates it pays on deposits and borrowings. Bank of Rustons
interest-earning assets consist primarily of residential mortgage loans which have short-term fixed
rates of interest for three to five years which amortize up to 30 years and commercial loans which
have fixed or, in some limited circumstances, adjustable rates of interest and terms up to five
years. Bank of Rustons interest-bearing liabilities primarily consist of higher rate certificates
of deposit rather than other types of deposit products. Consequently, Bank of Rustons ability to
maintain a positive spread between the interest earned on assets and the interest paid on deposits
and borrowings can be adversely affected when market rates of interest rise. At December 31, 2010,
certificates of deposit amounted to $38.7 million or 49.7% of total assets at such date.
Net Portfolio Value Analysis. Our interest rate sensitivity is monitored by management
through the use of models which generate estimates of the change in net portfolio value (NPV)
over a range of interest rate scenarios. NPV represents the market value of portfolio equity, which
is different from book value, and is equal to the market value of assets minus the market value of
liabilities with adjustments made for off-balance sheet items. The NPV ratio, under any interest
rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the
same scenario. The following table sets forth our NPV as of December 31, 2010 and reflects the
changes to NPV as a result of immediate and sustained changes in interest rates as indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Interest |
|
|
|
|
|
|
Rates |
|
|
|
|
|
|
In Basis Points |
|
Net Portfolio Value |
|
|
NPV as % of Portfolio Value of Assets |
|
(Rate Shock) |
|
Amount |
|
|
$ Change |
|
|
% Change |
|
|
NPV Ratio |
|
|
Change |
|
|
|
(Dollars in thousands) |
|
300bp |
|
$ |
20,092 |
|
|
$ |
(145 |
) |
|
|
(1 |
)% |
|
|
19.48 |
% |
|
6 |
bp |
200 |
|
|
20,307 |
|
|
|
70 |
|
|
|
|
|
|
|
19.59 |
|
|
17 |
bp |
100 |
|
|
20,367 |
|
|
|
130 |
|
|
|
1 |
|
|
|
19.58 |
|
|
16 |
bp |
50 |
|
|
20,308 |
|
|
|
71 |
|
|
|
|
|
|
|
19.51 |
|
|
9 |
bp |
Static |
|
|
20,237 |
|
|
|
|
|
|
|
|
|
|
|
19.42 |
|
|
|
|
|
(50) |
|
|
20,114 |
|
|
|
(122 |
) |
|
|
(1 |
) |
|
|
19.30 |
|
|
(12 |
)bp |
(100) |
|
|
20,124 |
|
|
|
(112 |
) |
|
|
(1 |
) |
|
|
19.29 |
|
|
(13 |
)bp |
Certain shortcomings are inherent in the methodology used in the above interest rate risk
measurement. Modeling changes in NPV requires the making of certain assumptions which may or may
not reflect the manner in which actual yields and costs respond to changes in market interest
rates. In this regard, the models presented assume that the composition of our interest sensitive
assets and liabilities existing at the beginning of a period remains constant over the period being
measured and also assumes that a particular change in interest rates is reflected uniformly across
the yield curve regardless of the duration to maturity or repricing of specific assets and
liabilities. Accordingly, although the NPV simulation model above provides an indication of
interest rate risk exposure at a particular point in time, such model is not intended to and do not
provide a precise forecast of the effect of changes in market interest rates on net interest income
and will differ from actual results.
Liquidity and Capital Resources
Century Next Financial maintains levels of liquid assets deemed adequate by management.
Century Next Financial adjusts its liquidity levels to fund deposit outflows, repay its borrowings
and to fund loan commitments. Century Next Financial also adjusts liquidity as appropriate to meet
asset and liability management objectives.
Century Next Financials primary sources of funds are deposits, amortization and prepayment of
loans and to a lesser extent, funds provided from operations. While scheduled principal repayments
on loans are a relatively predictable source of funds, deposit flows and loan prepayments are
greatly influenced by general interest rates, economic conditions and competition. Bank of Ruston
sets the interest rates on its deposits to maintain a desired level of total deposits. In
addition, Bank of Ruston invests excess funds in short-term interest-earning accounts and other
assets, which provide liquidity to meet lending requirements. Bank of Rustons cash and cash
equivalents amounted to $7.6 million at December 31, 2010.
35
A significant portion of Bank of Rustons liquidity consists of non-interest earning deposits.
Bank of Rustons primary sources of cash are principal repayments on loans and increases in
deposit accounts. If Bank of
Ruston requires funds beyond its ability to generate them internally, borrowing agreements exist
with the Federal Home Loan Bank of Dallas, which provide an additional source of funds. At
December 31, 2010, Bank of Ruston had advances of $415,000 from the Federal Home Loan Bank of
Dallas and had $41.2 million in borrowing capacity. Additionally, at December 31, 2010, Bank of
Ruston was a party to a Master Purchase Agreement with First National Bankers Bank whereby Bank of
Ruston may purchase Federal Funds from First National Bankers Bank in an amount not to exceed $2.5
million. There were no amounts purchased under this agreement as of December 31, 2010.
At December 31, 2010, Bank of Ruston had outstanding loan commitments of $3.8 million to
originate loans. At December 31, 2010, certificates of deposit scheduled to mature in less than
one year totaled $30.1 million. Based on prior experience, management believes that a significant
portion of such deposits will remain with us, although there can be no assurance that this will be
the case. In addition, in a rising interest rate environment, the cost of such deposits could be
significantly higher upon renewal. Bank of Ruston intends to utilize its liquidity to fund its
lending activities.
Bank of Ruston is required to maintain regulatory capital sufficient to meet tier 1 leverage,
tier 1 risk-based and total risk-based capital ratios of at least 4.0%, 4.0% and 8.0%,
respectively. At December 31, 2010, Bank of Ruston exceeded each of its capital requirements with
ratios of 14.6%, 21.1% and 21.4%, respectively.
Off-Balance Sheet Arrangements
In the normal course of operations, we engage in a variety of financial transactions that, in
accordance with generally accepted accounting principles are not recorded in our financial
statements. These transactions involve, to varying degrees, elements of credit, interest rate, and
liquidity risk. Such transactions are used primarily to manage customers requests for funding and
take the form of loan commitments and lines of credit. Our exposure to credit loss from
non-performance by the other party to the above-mentioned financial instruments is represented by
the contractual amount of those instruments. We use the same credit policies in making commitments
and conditional obligations as we do for on-balance sheet instruments. In general, we require
collateral or other security to support financial instruments with offbalance sheet credit risk.
Commitments. The following table summarizes our outstanding commitments to originate loans
and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and
undisbursed construction loans in process at December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
Amounts |
|
|
|
|
|
|
Committed at |
|
|
Amount of Commitment Expiration Per Period |
|
|
|
December 31, |
|
|
To 1 |
|
|
1-3 |
|
|
4-5 |
|
|
After 5 |
|
|
|
2010 |
|
|
Year |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
|
(In thousands) |
|
Letters of credit |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Standby letters of credit |
|
|
159 |
|
|
|
159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unused lines of credit |
|
|
3,198 |
|
|
|
3,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Undisbursed portion of loans in process |
|
|
443 |
|
|
|
443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments to originate loans |
|
|
3,788 |
|
|
|
3,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commitments |
|
$ |
7,588 |
|
|
$ |
7,588 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
Contractual Cash Obligations. The following table summarizes our contractual cash
obligations, consisting of certificates of deposit, at December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at |
|
|
Payments Due By Period |
|
|
|
December 31, |
|
|
To 1 |
|
|
1-3 |
|
|
4-5 |
|
|
After 5 |
|
|
|
2010 |
|
|
Year |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
|
(In thousands) |
|
Certificates of deposit |
|
$ |
33,276 |
|
|
$ |
30,879 |
|
|
$ |
2,267 |
|
|
$ |
130 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual obligations |
|
$ |
33,276 |
|
|
$ |
30,879 |
|
|
$ |
2,267 |
|
|
$ |
130 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 7A. |
|
Quantitative and Qualitative Disclosures about Market Risk. |
Not applicable.
37
|
|
|
Item 8. |
|
Financial Statements and Supplementary Data. |
[Letterhead of Heard, McElroy & Vestal LLP]
The Board of Directors
Century Next Financial Corporation
Ruston, Louisiana
Report of Independent Registered Public Accounting Report
We have audited the accompanying consolidated balance sheets of Century Next Financial Corporation
and Subsidiary as of December 31, 2010 and 2009, and the related consolidated statements of income,
changes in stockholders equity, and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Companys management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Century Next Financial Corporation and
Subsidiary as of December 31, 2010 and 2009, and the consolidated results of its operations and its
cash flows for the years then ended in conformity with accounting principles generally accepted in
the United States of America.
/s/
Heard, McElroy & Vestal LLP
March 21, 2011
Shreveport, Louisiana
38
CENTURY NEXT FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,581 |
|
|
$ |
4,674 |
|
Investment and mortgage-backed securities |
|
|
11,563 |
|
|
|
7,258 |
|
Federal Home Loan Bank stock |
|
|
280 |
|
|
|
280 |
|
Loans (includes loans held for sale of $801 and $761),
less allowance for loan losses of $204 and $176 |
|
|
71,613 |
|
|
|
66,998 |
|
Accrued interest receivable: |
|
|
|
|
|
|
|
|
Loans |
|
|
358 |
|
|
|
308 |
|
Securities |
|
|
38 |
|
|
|
28 |
|
Premises and equipment, net of accumulated depreciation of
$1,499 and $1,313 |
|
|
3,779 |
|
|
|
3,885 |
|
Foreclosed real estate |
|
|
|
|
|
|
|
|
Other assets |
|
|
2,903 |
|
|
|
2,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
98,115 |
|
|
$ |
85,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
Savings and demand |
|
$ |
39,179 |
|
|
$ |
31,659 |
|
Time |
|
|
38,716 |
|
|
|
44,284 |
|
|
|
|
|
|
|
|
Total deposits |
|
|
77,895 |
|
|
|
75,943 |
|
|
|
|
|
|
|
|
|
|
Advances from borrowers for insurance and taxes |
|
|
37 |
|
|
|
21 |
|
FHLB advances |
|
|
415 |
|
|
|
|
|
Securities sold under agreements to repurchase |
|
|
588 |
|
|
|
907 |
|
Accrued interest payable |
|
|
18 |
|
|
|
21 |
|
Other liabilities |
|
|
854 |
|
|
|
506 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
79,807 |
|
|
|
77,399 |
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Preferred Stock, $.01 par value 1,000,000 shares
authorized; none issued |
|
|
|
|
|
|
|
|
Common Stock, $.01 par value 9,000,000 shares
authorized; 1,058,000 issued, 1,058,000 outstanding |
|
|
11 |
|
|
|
|
|
Additional Paid In Capital |
|
|
9,821 |
|
|
|
|
|
Unearned ESOP Shares (65,870 shares) |
|
|
(661 |
) |
|
|
|
|
Accumulated other comprehensive income, net
of taxes of $37 and $35 |
|
|
73 |
|
|
|
69 |
|
Retained earnings |
|
|
9,064 |
|
|
|
8,407 |
|
|
|
|
|
|
|
|
Total equity |
|
|
18,308 |
|
|
|
8,476 |
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
98,115 |
|
|
$ |
85,875 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the consolidated financial statements.
39
CENTURY NEXT FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
Years Ended |
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
Interest income: |
|
|
|
|
|
|
|
|
First mortgage loans |
|
$ |
661 |
|
|
$ |
748 |
|
Consumer and other loans |
|
|
3,775 |
|
|
|
3,440 |
|
Investment securities |
|
|
178 |
|
|
|
217 |
|
Other |
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
Total interest income |
|
|
4,615 |
|
|
|
4,406 |
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
Savings and interest-bearing demand deposits |
|
|
151 |
|
|
|
197 |
|
Time deposits |
|
|
842 |
|
|
|
1,096 |
|
Other borrowings |
|
|
13 |
|
|
|
5 |
|
|
|
|
|
|
|
|
Total interest expense |
|
|
1,006 |
|
|
|
1,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
3,609 |
|
|
|
3,108 |
|
Provision for loan losses |
|
|
43 |
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses |
|
|
3,566 |
|
|
|
3,092 |
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
Service charges |
|
|
180 |
|
|
|
201 |
|
Loan fees |
|
|
562 |
|
|
|
408 |
|
Gain on sale of foreclosed real estate |
|
|
3 |
|
|
|
|
|
Gain on cash value of life insurance |
|
|
44 |
|
|
|
28 |
|
Gain on sale of fixed assets |
|
|
53 |
|
|
|
|
|
Other operating income |
|
|
58 |
|
|
|
136 |
|
|
|
|
|
|
|
|
Total noninterest income |
|
|
900 |
|
|
|
773 |
|
|
|
|
|
|
|
|
|
|
Noninterest expense |
|
|
|
|
|
|
|
|
Salaries and benefits |
|
|
2,084 |
|
|
|
1,929 |
|
Occupancy expense |
|
|
372 |
|
|
|
355 |
|
Expense of foreclosed real estate |
|
|
1 |
|
|
|
8 |
|
FDIC deposit insurance |
|
|
104 |
|
|
|
140 |
|
Outside service fees |
|
|
100 |
|
|
|
97 |
|
Service bureau expenses |
|
|
155 |
|
|
|
125 |
|
Advertising |
|
|
139 |
|
|
|
119 |
|
Office supplies, stationery and printing |
|
|
62 |
|
|
|
73 |
|
Other operating expense |
|
|
458 |
|
|
|
373 |
|
|
|
|
|
|
|
|
Total noninterest expense |
|
|
3,475 |
|
|
|
3,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
991 |
|
|
|
646 |
|
Income taxes |
|
|
335 |
|
|
|
182 |
|
|
|
|
|
|
|
|
Net income |
|
$ |
656 |
|
|
$ |
464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Common Share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.66 |
|
|
|
N/A |
|
Diluted |
|
$ |
0.66 |
|
|
|
N/A |
|
The accompanying notes are an integral part of the consolidated financial statements.
40
CENTURY NEXT FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Unearned |
|
|
Other |
|
|
|
|
|
|
|
|
|
Common |
|
|
Paid In |
|
|
ESOP |
|
|
Comprehensive |
|
|
Retained |
|
|
Total |
|
|
|
Stock |
|
|
Capital |
|
|
Shares |
|
|
Income |
|
|
Earnings |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
16 |
|
|
$ |
7,943 |
|
|
$ |
7,959 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
465 |
|
|
|
465 |
|
Unrealized gain on
securities available for
sale, net of taxes of
$27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53 |
|
|
|
|
|
|
|
53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
69 |
|
|
$ |
8,408 |
|
|
$ |
8,477 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
656 |
|
|
|
656 |
|
Unrealized gain on
securities available for
sale, net of taxes of $2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common Stock for Initial Public
Offering, net of $748
conversion cost |
|
|
11 |
|
|
|
9,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,832 |
|
Shares Purchased for ESOP |
|
|
|
|
|
|
|
|
|
|
(667 |
) |
|
|
|
|
|
|
|
|
|
|
(667 |
) |
ESOP Shares released for allocation |
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010 |
|
$ |
11 |
|
|
$ |
9,821 |
|
|
$ |
(661 |
) |
|
$ |
73 |
|
|
$ |
9,064 |
|
|
$ |
18,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the consolidated financial statements.
41
CENTURY NEXT FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Years Ended |
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
656 |
|
|
$ |
464 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Provision for loan losses |
|
|
43 |
|
|
|
16 |
|
Depreciation |
|
|
205 |
|
|
|
184 |
|
(Gain) on sale of foreclosed real estate |
|
|
(3 |
) |
|
|
|
|
Net (increase) decrease in loans held for sale |
|
|
(40 |
) |
|
|
(175 |
) |
(Gain) loss on cash value of life insurance |
|
|
(44 |
) |
|
|
|
|
(Gain) loss on sale of fixed assets |
|
|
(53 |
) |
|
|
|
|
(Increase) decrease in accrued interest receivable |
|
|
(60 |
) |
|
|
(26 |
) |
Increase (decrease) in accrued interest payable |
|
|
(3 |
) |
|
|
(18 |
) |
(Increase) decrease in other assets |
|
|
125 |
|
|
|
(414 |
) |
Increase (decrease) in other liabilities |
|
|
347 |
|
|
|
89 |
|
|
|
|
|
|
|
|
Total adjustments |
|
|
517 |
|
|
|
(344 |
) |
|
|
|
|
|
|
|
Net cash used by operating activities |
|
|
1,173 |
|
|
|
120 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Proceeds from sales and maturities of investment securities |
|
|
1,760 |
|
|
|
2,506 |
|
Purchase of investment securities |
|
|
(6,064 |
) |
|
|
(2,967 |
) |
Net redemption (purchase) of Federal Home Loan Bank stock |
|
|
(1 |
) |
|
|
|
|
Proceeds from sale of foreclosed real estate |
|
|
4 |
|
|
|
|
|
Purchases of life insurance |
|
|
(542 |
) |
|
|
|
|
Proceeds from fixed assets |
|
|
150 |
|
|
|
|
|
Purchase of premises and equipment, net |
|
|
(197 |
) |
|
|
(398 |
) |
Net (increase) decrease in loans |
|
|
(4,604 |
) |
|
|
(5,619 |
) |
|
|
|
|
|
|
|
Net cash provided (used) by investing activities |
|
|
(9,494 |
) |
|
|
(6,478 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net increase (decrease) in savings and demand deposits |
|
|
7,520 |
|
|
|
(81 |
) |
Net increase (decrease) in time deposits |
|
|
(5,569 |
) |
|
|
6,742 |
|
Increase (decrease) in advances from borrowers for
insurance and taxes |
|
|
16 |
|
|
|
1 |
|
Net increase (decrease) in FHLB advances |
|
|
415 |
|
|
|
(53 |
) |
Net increase (decrease) in securities sold under agreements to
repurchase |
|
|
(319 |
) |
|
|
907 |
|
Proceeds from Issuance of Common Stock |
|
|
10,580 |
|
|
|
|
|
Cost of Issuance of Common Stock |
|
|
(748 |
) |
|
|
|
|
Loan to ESOP for purchase of stock |
|
|
(667 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by financing activities |
|
|
11,228 |
|
|
|
7,516 |
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
2,907 |
|
|
|
1,158 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
|
4,674 |
|
|
|
3,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
$ |
7,581 |
|
|
$ |
4,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary cash flow information: |
|
|
|
|
|
|
|
|
Cash paid: Interest |
|
$ |
1,009 |
|
|
$ |
1,316 |
|
|
|
|
|
|
|
|
Income Taxes |
|
$ |
49 |
|
|
$ |
210 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the consolidated financial statements.
42
CENTURY NEXT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
1. |
|
Summary of Significant Accounting Policies |
On September 30, 2010, Bank of Ruston completed its conversion from a federally chartered mutual
savings bank to a stock savings bank. In connection with the conversion, Century Next Financial
Corporation was formed as the holding company for Bank of Ruston and offered and sold 1,058,000
shares of common stock for a total of $9.8 million in net proceeds. During 2005, Bank of Ruston
(formerly, Ruston Building & Loan Association) converted from a state chartered, mutual building
and loan association to a federally chartered, mutual savings bank. The change in the entitys
name resulted from this conversion.
|
a. |
|
Investments in securities |
The Banks investments in securities are classified in two categories and accounted for as
follows:
|
|
|
Securities Held to Maturity. Bonds, notes and debentures for which the Bank has the
positive intent and ability to hold to maturity are reported at cost, adjusted for
amortization of premiums and accretion of discounts, which are recognized in interest
income using the straight-line method over the period to maturity. |
|
|
|
|
Securities Available for Sale. Securities available for sale consist of bonds,
notes, debentures, and certain equity securities not classified as trading securities
nor as securities held to maturity. |
Declines in the fair value of individual held-to-maturity and available-for-sale securities
below their cost that are other than temporary result in write-downs of the individual
securities to their fair value. The related write-downs are included in earnings as
realized losses. No such write-downs were made in fiscal 2010 or fiscal 2009.
Unrealized gains and losses, net of income taxes, on securities available for sale are
accounted for in accumulated other comprehensive income as part of retained earnings.
Changes in unrealized gains and losses on these securities are separately reported as
components of other comprehensive income.
Gains and losses on the sale of securities available for sale are determined using the
specific-identification method.
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reported period. Actual results could differ
from those estimates.
Material estimates that are particularly susceptible to significant change relate to the
determination of the allowance for losses on loans and the valuation of real estate acquired
in connection with foreclosures or in satisfaction of loans. In connection with the
determination of the allowances for losses on loans and foreclosed real estate, management
obtains independent appraisals for significant properties.
Most of the Banks business activity is with customers located within the Ruston, Louisiana
area. The loan categories are detailed in Note 3. The economy of the area is diversified
but depends on timber, agriculture, and oil and gas. Although these areas of the economy
and the economy in general in the area are doing well, they could decline in the future.
43
1. |
|
Summary of Significant Accounting Policies (Continued) |
While management uses available information to recognize losses on loans, future additions
to the allowances may be necessary based on changes in local economic conditions. In
addition, regulatory agencies, as an integral part of their examination process,
periodically review the Banks allowances for losses on loans and foreclosed real estate.
Such agencies may require the Bank to recognize additions to the allowances based on their
judgments about information available to them at the time of their examination. Because of
these factors, it is reasonably possible that the allowance for losses on loans may change
materially in the near future.
|
c. |
|
Loans and allowance for loan losses |
Loans are stated at the amount of unpaid principal, reduced by deferred loan fees and an
allowance for loan losses. Deferred loan fees are generally recognized as income under the
effective yield method. Interest on loans is calculated by using the simple interest method
on daily or monthly balances of the principal amount outstanding. Loans held for sale are
reported at the lower of cost or market, with market value determined on the aggregate
method.
The allowance for loan losses is established through a provision for loan losses charged to
expense. Loans are charged against the allowance for loan losses when management believes
that the collectibility of the principal is unlikely. The allowance is an amount that
management believes will be adequate to absorb possible losses on existing loans that may
become uncollectible, based on evaluations of the collectibility of loans and prior loan
loss experience. The evaluations take into consideration such factors as changes in the
nature and volume of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the borrowers ability to
pay.
Accrual of interest is discontinued on a loan after it is 90 days or more past due and when
management believes, after considering economic and business conditions and collection
efforts, that the borrowers financial condition is such that collection of interest is
unlikely. Past due status is based on contractual terms of the loan. However, loans may be
placed on nonaccrual or charged off at an earlier date if collection of principal or
interest is considered doubtful.
All interest accrued but not collected for loans that are placed on nonaccrual or charged
off is reversed against interest income. The interest on these loans is accounted for on
the cash basis or cost recovery method, until qualifying for return to accrual. Loans are
returned to accrual status when all the principal and interest amounts contractually due are
brought current and future payments are reasonably assured.
Loans held for sale are disposed of within sixty days of origination; consequently, cost
approximates fair value.
|
d. |
|
Premises and equipment |
Premises and equipment are carried at cost less accumulated depreciation. Depreciation of
premises and equipment is provided over the estimated useful lives of the respective assets
using straight-line and accelerated methods. Expenditures for major renewals and
betterments of premises and equipment are capitalized and those for maintenance and repairs
are charged to expense as incurred.
|
e. |
|
Bank Owned Life Insurance |
The Bank has purchased insurance policies on the lives of certain directors and executive
officers of the Bank. The Bank purchased the policies to insure the lives of certain key
executives and provide additional benefits for their beneficiaries. The cash surrender value
of the insurance policies, up to the total amount of premiums paid, is recorded as an asset
in the balance sheets and included in other assets. At December 31, 2010 and December 31,
2009, the cash surrender value amounted to $2.5 million, and $1.9 million, respectively. The
Bank may not invest more than 25 percent of its total capital in bank-owned life insurance
without first notifying and obtaining authorization from the Banks OTS Regional Office. The
bank-owned life insurance provides an attractive tax-exempt return to the Bank.
44
1. |
|
Summary of Significant Accounting Policies (Continued) |
Deferred income taxes are recognized for the tax consequences of differences between the
financial statement carrying amounts and the tax bases of existing assets and liabilities.
Such differences arise primarily from differences in computing the provision for possible
loan losses, and differences in recognizing interest expense.
|
g. |
|
Cash and cash equivalents |
For purposes of the statement of cash flows, the Bank considers all cash on hand and demand
deposits with other banks to be cash equivalents. The Bank is required to maintain balances
on hand or with the Federal Reserve Bank. At December 31, 2010 and 2009, these reserve (in
thousands) requirements amounted to $581 and $533, respectively.
Advertising costs are expensed as incurred. Such costs (in thousands) amounted to
approximately $139 and $119 for December 31, 2010 and 2009, respectively.
|
i. |
|
Comprehensive income (loss) |
Generally accepted accounting principles (GAAP) generally require that recognized
revenues, expenses, gains, and losses be included in net earnings. Although certain changes
in assets and liabilities, such as unrealized gains and losses on available for sale
securities, are reported as a separate component of the equity section of the balance
sheets, such items, along with net earnings, are components of comprehensive income. The
Company presents comprehensive income in its statements of retained earnings.
Certain reclassifications have been made to prior period balances to conform to the current
period presentation.
|
k. |
|
Recent accounting pronouncements |
In June 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-01, Topic 105
Generally Accepted Accounting Principles amendments based on Statement of Financial
Accounting Standards No. 168 The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles. ASU 2009-01 amends the ASC for the issuance of
FASB Statement (SFAS) No. 168, The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles. ASU 2009-1 includes SFAS 168 in its
entirety, including the accounting standards update instructions contained in Appendix B of
the Statement. The ASC became the source of authoritative U.S. generally accepted
accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental
entities. Rules and interpretive releases of the Securities Exchange Committee (SEC)
under authority of federal securities laws are also sources of authoritative GAAP for SEC
registrants. As of the effective date of this Statement, September 15, 2009, the ASC
supersedes all then-existing non-SEC accounting and reporting standards. All other
non-grandfathered non-SEC accounting literature not included in the ASC is no longer
authoritative. This Statement became effective for the Banks financial statements
beginning in the interim period ended September 30, 2009.
In April 2009, the FASB issued guidance under ASC Topic 825. The guidance requires
disclosures about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. This guidance was
adopted for interim reporting periods ending after June 15, 2009.
45
1. |
|
Summary of Significant Accounting Policies (Continued) |
The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions,
or Emerging Issues Task Force (EITF) Abstracts. Instead, it now issues Accounting
Standards Updates. The FASB does not consider Accounting Standards Updates as authoritative
in their own right. Accounting Standards Updates serve only to update the ASC, provide
background information about the guidance, and provide the bases for conclusions on the
change(s) in the ASC. FASB Statement No. 162, The Hierarchy of Generally Accepted
Accounting Principles, which became effective on November 13, 2008, identified the sources
of accounting principles and the framework for selecting the principles used in preparing
the financial statements of nongovernmental entities that are presented in conformity with
GAAP. SFAS 162 arranged these sources of GAAP in a hierarchy for users to apply
accordingly. Upon becoming effective, all of the content of the ASC carries the same level
of authority, effectively superseding SFAS 162. In other words, the GAAP hierarchy has been
modified to include only two levels of GAAP: authoritative and non-authoritative. As a
result, this Statement replaces SFAS 162 to indicate this change to the GAAP hierarchy. The
adoption of the ASC and ASU 2009-01 did not have any effect on the Banks results of
operations or financial position. All references to accounting literature included in the
notes to the consolidated financial statements have been changed to reference the
appropriate sections of the ASC.
In January 2010, the FASB issued Accounting Standards Update No. 2010-06, Fair Value
Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value
Measurements. ASU 2010-06 amends Subtopic 820-10 with new disclosure requirements and
clarification of existing disclosure requirements. New disclosures required include the
amount of significant transfers in and out of levels 1 and 2 fair value measurements and the
reasons for the transfers. In addition, the reconciliation for level 3 activity will be
required on a gross rather than net basis. The ASU provides additional guidance related to
the level of disaggregation in determining classes of assets and liabilities and disclosures
about inputs and valuation techniques. The amendments are effective for annual or interim
reporting periods beginning after December 15, 2009, except for the requirement to provide
the reconciliation for level 3 activity on a gross basis which will be effective for fiscal
years beginning after December 15, 2010.
The carrying amounts (in thousands) of investment securities and their approximate fair
values at December 31, 2010 and 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Estimated |
|
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Fair Value |
|
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GNMA certificates |
|
$ |
14 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
14 |
|
FHLB certificates |
|
|
2,305 |
|
|
|
90 |
|
|
|
|
|
|
|
2,395 |
|
FNMA certificates |
|
|
1,347 |
|
|
|
24 |
|
|
|
|
|
|
|
1,371 |
|
FNR certificates |
|
|
230 |
|
|
|
1 |
|
|
|
|
|
|
|
231 |
|
SBA pools |
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
7 |
|
U.S. Government obligations |
|
|
7,103 |
|
|
|
5 |
|
|
|
13 |
|
|
|
7,095 |
|
Municipal securities |
|
|
310 |
|
|
|
3 |
|
|
|
|
|
|
|
313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
11,316 |
|
|
$ |
123 |
|
|
$ |
13 |
|
|
$ |
11,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB certificates |
|
$ |
3 |
|
|
$ |
|
|
|
$ |
|
|
|
|
3 |
|
SBA pools |
|
|
134 |
|
|
|
1 |
|
|
|
1 |
|
|
|
134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
137 |
|
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46
2. |
|
Investment Securities (Continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Estimated |
|
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Fair Value |
|
|
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB certificates |
|
$ |
3,034 |
|
|
$ |
80 |
|
|
$ |
|
|
|
$ |
3,114 |
|
GNMA certificates |
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
15 |
|
FNMA certificates |
|
|
2,293 |
|
|
|
13 |
|
|
|
3 |
|
|
|
2,303 |
|
FNR certificates |
|
|
257 |
|
|
|
6 |
|
|
|
|
|
|
|
263 |
|
SBA pools |
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
8 |
|
U.S. Government obligations |
|
|
1,029 |
|
|
|
6 |
|
|
|
|
|
|
|
1,035 |
|
Municipal securities |
|
|
345 |
|
|
|
3 |
|
|
|
|
|
|
|
348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities |
|
|
6,981 |
|
|
|
108 |
|
|
|
3 |
|
|
|
7,086 |
|
Equity securities |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,982 |
|
|
$ |
108 |
|
|
$ |
3 |
|
|
$ |
7,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SBA pools |
|
$ |
171 |
|
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the gross unrealized losses (in thousands) and fair value of the
Banks investments with unrealized losses, aggregated by investment category and length of time
that individual securities have been in a continuous unrealized loss position, at December 31,
2010 and 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
Less than 12 Months |
|
|
12 Months or Greater |
|
|
Total |
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
Gross |
|
|
|
Estimated |
|
|
Unrealized |
|
|
Estimated |
|
|
Unrealized |
|
|
Estimated |
|
|
Unrealized |
|
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
|
Mortgage backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government obligations |
|
$ |
6,083 |
|
|
$ |
13 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
6,083 |
|
|
$ |
13 |
|
FNMA certificates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNR certificates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHR certificates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SBA pools |
|
|
|
|
|
|
|
|
|
|
61 |
|
|
|
1 |
|
|
|
61 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,083 |
|
|
$ |
13 |
|
|
$ |
61 |
|
|
$ |
1 |
|
|
$ |
6,144 |
|
|
$ |
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
|
Less than 12 Months |
|
|
12 Months or Greater |
|
|
Total |
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
Gross |
|
|
|
Estimated |
|
|
Unrealized |
|
|
Estimated |
|
|
Unrealized |
|
|
Estimated |
|
|
Unrealized |
|
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
|
Mortgage backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA certificates |
|
$ |
629 |
|
|
$ |
2 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
629 |
|
|
$ |
2 |
|
FNR certificates |
|
|
|
|
|
|
|
|
|
|
463 |
|
|
|
1 |
|
|
|
463 |
|
|
|
1 |
|
FHR certificates |
|
|
|
|
|
|
|
|
|
|
42 |
|
|
|
|
|
|
|
42 |
|
|
|
|
|
SBA pools |
|
|
|
|
|
|
|
|
|
|
93 |
|
|
|
2 |
|
|
|
93 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
629 |
|
|
$ |
2 |
|
|
$ |
598 |
|
|
$ |
3 |
|
|
$ |
1,227 |
|
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47
2. |
|
Investment Securities (Continued) |
Management evaluates securities for other-than-temporary impairment on at least a quarterly
basis, and more frequently when economic or market concerns warrant such evaluation.
Consideration is given to (1) the length of time and the extent to which the fair value has
been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3)
the intent and ability of the Company to retain its investment in the issuer for a period of
time sufficient to allow for any anticipated recovery in fair value.
Market changes in interest rates and market changes in credit spreads will cause normal
fluctuations in the market value of securities and the possibility of temporary unrealized
losses. The Company has determined that there was no other-than-temporary impairment
associated with these securities at December 31, 2010 and 2009.
The scheduled maturities of debt securities at December 31, 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity |
|
|
Securities Available for Sale |
|
|
|
|
|
|
Estimated |
|
|
|
|
|
Estimated |
|
|
|
Amortized Cost |
|
|
Fair Value |
|
|
Amortized Cost |
|
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less |
|
$ |
3 |
|
|
$ |
3 |
|
|
$ |
1,007 |
|
|
$ |
1,012 |
|
Due from one year to
five years |
|
|
|
|
|
|
|
|
|
|
6,096 |
|
|
|
6,083 |
|
Due from five to ten
years |
|
|
134 |
|
|
|
134 |
|
|
|
411 |
|
|
|
414 |
|
Due after ten years |
|
|
|
|
|
|
|
|
|
|
3,802 |
|
|
|
3,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
137 |
|
|
$ |
137 |
|
|
$ |
11,316 |
|
|
$ |
11,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The FHLB stock is a restricted investment security, and is carried at cost. Total (in
thousands) at December 31, 2010 was $280; at December 31, 2009, it was $280.
The following table summarizes investment activities (in thousands) for the periods ending December
31, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
Held to Maturity |
|
|
Available for Sale |
|
|
Held to Maturity |
|
|
Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of securities |
|
$ |
|
|
|
$ |
6,064 |
|
|
$ |
|
|
|
$ |
2,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities of securities |
|
$ |
34 |
|
|
$ |
1,726 |
|
|
$ |
104 |
|
|
$ |
2,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
Loans (in thousands) at December 31, 2010 and 2009, consist of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Held for sale (one- to four family) |
|
$ |
801 |
|
|
$ |
761 |
|
Residential real estate (one-to four family) |
|
|
35,466 |
|
|
|
35,338 |
|
Commercial real estate and lines of credit |
|
|
12,853 |
|
|
|
12,670 |
|
Multifamily real estate |
|
|
2,027 |
|
|
|
2,247 |
|
Land |
|
|
6,891 |
|
|
|
4,292 |
|
Residential construction |
|
|
777 |
|
|
|
1,365 |
|
Commercial business |
|
|
5,970 |
|
|
|
4,436 |
|
Home equity lines of credit |
|
|
1,250 |
|
|
|
1,697 |
|
Consumer non-real estate |
|
|
5,740 |
|
|
|
4,337 |
|
Overdrafts |
|
|
42 |
|
|
|
31 |
|
|
|
|
|
|
|
|
|
|
|
71,817 |
|
|
|
67,174 |
|
Allowance for loan losses |
|
|
(204 |
) |
|
|
(176 |
) |
|
|
|
|
|
|
|
|
|
$ |
71,613 |
|
|
$ |
66,998 |
|
|
|
|
|
|
|
|
Changes in the allowance for loan losses (in thousands) are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
176 |
|
|
$ |
183 |
|
Provision for loan losses |
|
|
43 |
|
|
|
16 |
|
Loans charged off |
|
|
(18 |
) |
|
|
(24 |
) |
Recoveries |
|
|
3 |
|
|
|
1 |
|
|
|
|
|
|
|
|
Ending Balance |
|
$ |
204 |
|
|
$ |
176 |
|
|
|
|
|
|
|
|
Loans on which the accrual of interest has been discontinued amounted to approximately $423
and $248 at December 31, 2010 and 2009, respectively. Had nonaccrual loans been current during
the year per their original terms, interest income would have increased by approximately $22 for
2010 and $10 for 2009. Impaired loans are not significant.
The Bank is obligated to repurchase those mortgage loans sold which do not have complete
documentation or which experience an early payment default. At December 31, 2010 and December
31, 2009, loans sold (in thousands) for which the Bank is contingently liable to repurchase
amounted to approximately $10,793 and $7,919. The Bank also is committed to sell loans (in
thousands) approximating $801 and $761 at December 31, 2010 and 2009, respectively.
The Bank grants consumer, commercial and residential loans to customers in Ruston, Louisiana and
the surrounding area. Although the Bank has a diversified loan portfolio, a substantial portion
of loan repayment is dependent upon the general economic sector.
49
4. |
|
Premises and Equipment |
Premises and equipment (in thousands) at December 31, 2010 and 2009, are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
December 31, |
|
|
|
Useful Lives |
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
|
|
|
|
$ |
1,080 |
|
|
$ |
1,150 |
|
Buildings and improvements |
|
15-40 years |
|
|
2,934 |
|
|
|
2,898 |
|
Furniture, fixtures and equipment |
|
3-10 years |
|
|
1,227 |
|
|
|
1,121 |
|
Vehicles |
|
4 years |
|
|
37 |
|
|
|
29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,278 |
|
|
|
5,198 |
|
Less accumulated depreciation |
|
|
|
|
|
|
(1,499 |
) |
|
|
(1,313 |
) |
|
|
|
|
|
|
|
|
|
|
|
Premises and equipment |
|
|
|
|
|
$ |
3,779 |
|
|
$ |
3,885 |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation (in thousands) charged to operations amounted to $205 in 2010 and $184 in 2009
for the years ending in December.
The Bank is subject to various regulatory capital requirements administered by federal banking
agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and
possibly additional discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Banks financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Banks assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices. The Banks capital
amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to
maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital
(as defined in the regulations) to risk-weighted assets (as defined), and of Tier I and Tangible
capital (as defined) to average assets (as defined). Management believes, as of December 31,
2010, that the Bank meets all capital adequacy requirements to which it is subject.
50
5. |
|
Regulatory Capital (Continued) |
As of December 31, 2010, the most recent notification from the Office of Thrift Supervision
categorized the Bank as well capitalized under the regulatory framework for prompt corrective
action. To be categorized as adequately capitalized the Bank must maintain minimum total
risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. The Banks
actual capital amounts (in thousands) and ratios are also presented in the table. There are no
conditions or events since that notification that management believes have changed the
institutions category.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To Be Well Capitalized |
|
|
|
|
|
|
|
|
|
|
|
For Capital Adequacy |
|
|
Under Prompt Corrective |
|
|
|
Actual |
|
|
Purposes |
|
|
Action Provisions: |
|
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
As of December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to
Risk Weighted
Assets) |
|
|
14,502 |
|
|
|
21.36 |
% |
|
|
5,432 |
|
|
|
³8.0 |
% |
|
|
6,790 |
|
|
|
³10.0 |
% |
Core (Tier 1)
Capital (to Risk
Weighted Assets) |
|
|
14,318 |
|
|
|
21.09 |
% |
|
|
2,716 |
|
|
|
³4.0 |
% |
|
|
4,074 |
|
|
|
³6.0 |
% |
Core (Tier 1)
Capital (to Total
Assets) |
|
|
14,318 |
|
|
|
14.60 |
% |
|
|
3,923 |
|
|
|
³4.0 |
% |
|
|
4,904 |
|
|
|
³5.0 |
% |
Tangible Capital
(to Total Assets) |
|
|
14,318 |
|
|
|
14.60 |
% |
|
|
1,471 |
|
|
|
³1.5 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to
Risk Weighted
Assets) |
|
|
8,580 |
|
|
|
13.93 |
% |
|
|
4,927 |
|
|
|
³8.0 |
% |
|
|
6,159 |
|
|
|
³10.0 |
% |
Core (Tier 1)
Capital (to Risk
Weighted Assets) |
|
|
8,407 |
|
|
|
13.65 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
3,695 |
|
|
|
³6.0 |
% |
Core (Tier 1)
Capital (to Total
Assets) |
|
|
8,407 |
|
|
|
9.79 |
% |
|
|
3,434 |
|
|
|
³4.0 |
% |
|
|
4,293 |
|
|
|
³5.0 |
% |
Tangible Capital
(to Total Assets) |
|
|
8,407 |
|
|
|
9.79 |
% |
|
|
1,288 |
|
|
|
³1.5 |
% |
|
|
N/A |
|
|
|
N/A |
|
The following is a reconciliation of the Banks equity under GAAP to regulatory capital at
the dates indicated (dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
GAAP equity |
|
$ |
15,054 |
|
|
$ |
8,476 |
|
Allowance for loan losses/other |
|
|
(552 |
) |
|
|
104 |
|
|
|
|
|
|
|
|
Total capital |
|
$ |
14,502 |
|
|
$ |
8,580 |
|
|
|
|
|
|
|
|
6. |
|
Related Party Transactions |
At December 31, 2010 and 2009, certain officers, directors, or companies in which they have 10%
or more beneficial ownership were indebted to the Bank in the approximate aggregate amounts (in
thousands) of $897 and $2,249, respectively. Such parties held deposits (in thousands) in the
Bank in the approximate amounts of $3,763 and $4,680 at December 31, 2010 and 2009,
respectively. Total principal additions (in thousands) were $582 and $1,716 and total
principal payments (in thousands) were $1,934 and $1,805 for the years ended December 31, 2010
and 2009, respectively.
7. |
|
Commitments and Contingencies |
In the ordinary course of business, the Bank has outstanding commitments on which management
does not anticipate losses. They include, among other things, commitments to extend credit and
letters of credit undertaken in the normal course of business. As of December 31, 2010 and
December 31, 2009, the Bank had $7,429 and $1,993, respectively, of loan commitments
outstanding (in thousands), including loans in process and unused lines of credit. Letters and
standby letters of credit (in thousands) outstanding at December 31, 2010 and December 31, 2009
amounted to $159 and $1,036, respectively.
51
7. |
|
Commitments and Contingencies (Continued) |
When entered into, these commitments represent off-balance sheet risk to the Bank, with the
contractual notional amount representing the Banks exposure to credit loss in the event of
nonperformance by the other party to the instruments. Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any condition established
in the contract. They generally have fixed expiration dates and require payment of a fee.
Since many commitments are expected to expire without being drawn upon, the total commitments
do not necessarily represent future cash requirements. The Bank evaluates each customers
creditworthiness on a case-by-case basis, and obtains an amount of collateral it deems
sufficient.
The Bank is party to agreements for the provision of data processing and imaging services.
These agreements generally run until October 2011 at approximately $11,000 (including a $3,000
fixed fee) per month. Certain agreements automatically renew for a successive five year term
at market rates at the end of the current term, if no advance notice of termination is given.
Future estimated minimum payments (in thousands) at December 31, 2010 under these agreements
are as follows:
|
|
|
|
|
2011 (end of term) |
|
$ |
103 |
|
|
|
|
|
|
|
$ |
103 |
|
|
|
|
|
As of December 31, 2010 and 2009, the Bank had interest rate lock commitments and corresponding
forward sale commitments related to these interest rate lock commitments with notional amounts
(in thousands) of $1,278 and $1,483, respectively. The fair value of such commitments offset
to zero, and the gross value was immaterial.
Deposits (in thousands) at December 31, 2010 and December 31, 2009 are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
Weighted Average |
|
|
|
|
|
|
Weighted Average |
|
|
|
Amount |
|
|
Rate |
|
|
Amount |
|
|
Rate |
|
Savings and Demand |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest bearing accounts |
|
$ |
7,881 |
|
|
|
|
|
|
$ |
7,065 |
|
|
|
|
|
Interest bearing checking |
|
|
15,997 |
|
|
|
0.40 |
% |
|
|
13,919 |
|
|
|
0.40 |
% |
Savings accounts |
|
|
6,839 |
|
|
|
0.40 |
% |
|
|
6,716 |
|
|
|
0.40 |
% |
Money market |
|
|
8,462 |
|
|
|
1.00 |
% |
|
|
3,959 |
|
|
|
1.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,179 |
|
|
|
|
|
|
|
31,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.00% to 0.99% |
|
|
3,977 |
|
|
|
0.74 |
% |
|
|
|
|
|
|
|
|
1.00% to 1.99% |
|
|
21,142 |
|
|
|
1.37 |
% |
|
|
14,958 |
|
|
|
1.62 |
% |
2.00% 2.99% |
|
|
11,900 |
|
|
|
2.36 |
% |
|
|
17,294 |
|
|
|
2.19 |
% |
3.00% 3.99% |
|
|
1,697 |
|
|
|
3.11 |
% |
|
|
11,557 |
|
|
|
3.26 |
% |
4.00% 4.99% |
|
|
|
|
|
|
|
|
|
|
475 |
|
|
|
4.16 |
% |
5.00% 5.99% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total time deposits |
|
|
38,716 |
|
|
|
|
|
|
|
44,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
|
$ |
77,895 |
|
|
|
|
|
|
$ |
75,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52
Scheduled maturities of time deposits, excluding IRA accounts, at December 31, 2010 are as
follows:
|
|
|
|
|
2011 |
|
$ |
30,879 |
|
2012 |
|
|
2,267 |
|
Thereafter |
|
|
130 |
|
|
|
|
|
|
|
$ |
33,276 |
|
|
|
|
|
Time deposits (in thousands) of $100,000 or more amounted to approximately $14,102 and $18,985
at December 31, 2010 and 2009, respectively.
Income tax expense (in thousands) as of December 31, 2010 and 2009 is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
Federal: |
|
|
|
|
|
|
|
|
Current |
|
$ |
320 |
|
|
$ |
142 |
|
Community Renewal credits |
|
|
|
|
|
|
(22 |
) |
Deferred |
|
|
15 |
|
|
|
62 |
|
|
|
|
|
|
|
|
Total income taxes |
|
$ |
335 |
|
|
$ |
182 |
|
|
|
|
|
|
|
|
A reconciliation of the federal statutory rate to the effective income tax rate for the years
ended December 31, 2010 and 2009 is as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Federal statutory income tax rate |
|
|
34.0 |
% |
|
|
34.0 |
% |
Wage credits |
|
|
|
|
|
|
(2.2 |
) |
Non-taxable income |
|
|
(1.0 |
) |
|
|
(4.1 |
) |
Other |
|
|
0.7 |
|
|
|
0.5 |
|
|
|
|
|
|
|
|
Effective tax rate expense (benefit) |
|
|
33.7 |
% |
|
|
28.2 |
% |
|
|
|
|
|
|
|
The components of the deferred income taxes (in thousands) included in other assets in the
statements of condition are approximately as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
|
$ |
142 |
|
|
$ |
130 |
|
Deferred compensation |
|
|
40 |
|
|
|
30 |
|
|
|
|
|
|
|
|
Subtotal deferred tax assets |
|
|
182 |
|
|
|
160 |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
(109 |
) |
|
|
(88 |
) |
Unrealized gains on securities available for sale |
|
|
(37 |
) |
|
|
(35 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal deferred tax liability |
|
|
(146 |
) |
|
|
(123 |
) |
|
|
|
|
|
|
|
Total deferred income tax asset, net |
|
$ |
36 |
|
|
$ |
37 |
|
|
|
|
|
|
|
|
53
9. |
|
Income Taxes (Continued) |
These deferred tax assets and liabilities arise from temporary differences related to the
allowance for loan losses, accumulated depreciation, accrued interest payable, and unrealized
gains or losses on investment securities available for sale. The major difference in reported
income tax expense and expected income taxes based upon pretax income results from Community
Renewal credits and changes in the cash surrender value of life insurance. Other liabilities at
December 31, 2010 and 2009 include income taxes payable (in thousands) of $245 and $21.
The Bank, as required by accounting standards, reviewed its various tax positions taken or
expected to be taken in its tax returns and has determined it does not have unrecognized tax
benefits, nor does it expect that position to change significantly over the next twelve months.
The Bank recognizes interest and penalties accrued on any unrecognized tax benefits as a
component of income tax expense. As of December 31, 2010, it has not accrued interest or
penalties related to uncertain tax positions.
The Bank files an annual U.S. Federal income tax return. Federal income tax returns for the tax
years 2008 and beyond remain subject to examination by the Internal Revenue Service.
10. |
|
Foreclosed Real Estate |
Foreclosed real estate represents property acquired through foreclosure or deeded in lieu of
foreclosure on loans on which the borrowers have defaulted as to payment of principal and
interest. The Bank also transfers to this category those loans meeting the applicable criteria
for loans considered repossessions insubstance. Amounts are carried at the lower of cost of
acquisition or the assets fair value less estimated costs to sell. Reductions in the balance
at the date of acquisition are charged to the allowance for loan losses. Any subsequent
writedowns to reflect current fair value are charged to noninterest expense and credited to
foreclosed real estate. Direct costs incurred in foreclosures are also charged to noninterest
expense. At December 31, 2010 and 2009, the Bank held no foreclosed real estate.
The Bank participates in a multi-employer, noncontributory defined benefit retirement plan
sponsored by Pentegra Defined Benefit Plan for Financial Institutions. Effective March 1, 2007,
the Bank elected to freeze the benefits provided under the plan to existing participants, to
cease future benefit accruals, and to cease eligibility for future employees. Those
participants in the Plan as of March 1, 2007 will receive a benefit equal to the benefit accrued
under the Plan as of that date. The Bank incurred pension contribution expense (in thousands)
of $60 in 2010 and $60 in 2009.
The Bank also participates in an employee 401(k) retirement plan. Participants may contribute
up to 50% of their compensation to the plan, with the Bank matching 75% of the participants
elective deferrals up to a maximum of 6% of compensation. The Banks contribution expense (in
thousands) to this plan amounted to $53 and $44 for December 2010 and 2009.
The Company established an Employee Stock Ownership Plan (ESOP) with the initial public
offering. Employees are generally eligible to participate in the ESOP after completion of one
year of service and attaining the age of 21. The ESOP purchased 66,704 shares which was
facilitated by a loan from the Company to the ESOP in the amount of $667,040. The loan is
secured by a pledge of the ESOP shares. The shares pledged as collateral are reported as
unearned ESOP shares in the Consolidated Balance Sheet. The corresponding note is being repaid
in 80 quarterly debt service payments of $11,372 on the last business day of each quarter,
beginning December 31, 2010, at a rate of 3.25%
The Company may contribute to the ESOP, in the form of debt service, at the discretion of its
board of directors. Cash dividends on the Companys stock shall be used to either repay the
loan, be distributed to the participants in the ESOP, or retained in the ESOP and reinvested in
the Company stock. Shares are released for allocation to ESOP participants based on principal
and interest payments on the note. Compensation expense is recognized based on the number of shares allocated to ESOP participants each year and the average market price of the stock for
the current year. Released ESOP shares become outstanding for earnings per share computations.
54
11. |
|
Retirement Plans (Continued) |
As compensation expense is incurred, the Unearned ESOP shares account is reduced based on the
original cost of the stock. The difference between the cost and the average market price of
shares released for allocation is applied to Additional Paid-In Capital. ESOP compensation
expense for the year ended December 31, 2010 was $10,000. Shares released in 2010 were 833.8
and the market value of the unreleased shares (65,870) at December 31, 2010 was $757,507.
12. |
|
Deferred Compensation Plan |
The Bank implemented a deferred compensation plan in late 1993 for certain key employees, and in
1996 for certain directors. The plans generally provide for retirement, death or disability
payments, payable over 25 years (20 years for directors). The Bank obtained insurance on these
individuals to provide for funding of the plan; however, the policies themselves are not pledged
against the benefits. The plan limits the ultimate benefits to the cash surrender value (CSV)
in the policies, after a certain return is realized by the Bank from those policies. Thus,
based upon this limitation, deferred compensation is recognized to the extent of the CSV
increase each year, once the Bank realizes its return.
Following is a summary of deferred compensation payable (in thousands) and the related cash
values of the life insurance contracts for December 31, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Cash surrender value of life insurance contracts |
|
$ |
2,506 |
|
|
$ |
1,920 |
|
Earnings (loss) of life insurance contracts-directors |
|
|
42 |
|
|
|
86 |
|
Earnings (loss) of life insurance contracts-officers |
|
|
44 |
|
|
|
6 |
|
Deferred compensation payable-directors |
|
|
300 |
|
|
|
213 |
|
Deferred compensation payable officers |
|
|
237 |
|
|
|
210 |
|
Borrowings include advances from the Federal Home Loan Bank. Such advances are secured by
deposit accounts in the Federal Home Loan Bank, Bank-owned capital stock in the Federal Home
Loan Bank, and investment securities held in the custody of the Federal Home Loan Bank.
These advances (in thousands) as of December 31, 2010 and 2009 are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Long-term advance dated 9-22-10, monthly payment (in
thousands) of $4 for ten years, including interest
fixed at 3.234% |
|
$ |
415 |
|
|
$ |
|
|
|
|
|
|
|
|
|
The Bank has borrowing (in thousands) available to it as of December 31, 2010 in the approximate
amount of $41,203 under current terms with the Federal Home Loan Bank.
Additional borrowing also is available through another bank for federal funds purchases. As of
December 31, 2010, this credit line is for a maximum borrowing limit (in thousands) of $2,500 at
the existing federal funds rate of the lender, and expires June 1, 2011. No amounts were
outstanding on this credit line at December 31, 2010 or December 31, 2009.
55
13. |
|
Borrowings (Continued) |
The Bank has overnight repurchase agreements with certain checking account customers, which are
shown as securities sold under agreements (repos) to repurchase. At December 31, 2010 and
December 31, 2009, the amount (in thousands) outstanding was $588 and $907, respectively.
Interest expense (in thousands) on the repos was $10 as of December 31, 2010 and $4 as of
December 31, 2009. The market value of the collateral was approximately equal to the amounts
outstanding. The average balance outstanding (in thousands) as of December 31, 2010 was $951.
The maximum balance outstanding (in thousands) for the year ended December 31, 2010 was $1,372.
14. |
|
Fair Value Measurements |
|
|
Accounting standards in the United States of America establish a framework for using fair value
to measure assets and liabilities, and define fair value as the price that would be received to
sell an asset or paid to transfer a liability (an exit price) as opposed to the price that would
be paid to acquire the asset or received to assume the liability (an entry price). |
|
|
Under these standards, a fair value measure should reflect the assumptions that market
participants would use in pricing the asset or liability, including the assumptions about the
risk inherent in a particular valuation technique, the effect of a restriction on the sale or
use of an asset, and the risk of nonperformance. Required disclosures stratify balance sheet
accounts measured at fair value based on inputs the Bank uses to derive fair value measurements.
These strata include: |
|
|
|
Level 1 valuations, where the valuation is based on quoted market prices for
identical assets or liabilities traded in active markets (which include exchanges
and over-the-counter markets with sufficient volume). |
|
|
|
Level 2 valuations, where the valuation is based on quoted market prices for
similar instruments traded in active markets, quoted prices for identical or similar
instruments in markets that are not active, and model-based valuation techniques for
which all significant assumptions are observable in the market. |
|
|
|
Level 3 valuations, where the valuation is generated from model-based techniques
that use significant assumptions not observable in the market, but observable based on
Bank-specific data. These unobservable assumptions reflect the Banks own estimates
for assumptions that market participants would use in pricing the asset or liability.
Valuation techniques typically include option pricing models, discounted cash flow
models, and similar techniques, but may also include the use of market prices of assets
or liabilities that are not directly comparable to the subject asset or liability. |
|
|
Items Measured at Fair Value on a Recurring Basis |
|
|
For the Bank, the only items recorded at fair value on a recurring basis are securities
available for sale. These securities consist primarily of mortgage-backed (including Agency)
securities. When available, the Bank uses quoted market prices of identical assets on active
exchanges (Level 1 measurements). Where such quoted market prices are not available, the Bank
typically employs quoted market prices of similar instruments (including matrix pricing) and/or
discounted cash flows to estimate a value of these securities (Level 2 measurements). Level 3
measurements include discounted cash flow analyses based on assumptions that are not readily
observable in the market place, including projections of future cash flows, loss assumptions,
and discount rates. |
56
14. |
|
Fair Value Measurements (Continued) |
|
|
The following table presents financial assets and liabilities (in thousands) measured at fair
value on a recurring basis at December 31, 2010 and December 31, 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value |
|
|
December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB certificates |
|
$ |
|
|
|
$ |
2,395 |
|
|
$ |
|
|
|
$ |
2,395 |
|
GNMA certificates |
|
|
|
|
|
|
14 |
|
|
|
|
|
|
|
14 |
|
FNMA certificates |
|
|
|
|
|
|
1,371 |
|
|
|
|
|
|
|
1,371 |
|
FNR certificates |
|
|
|
|
|
|
231 |
|
|
|
|
|
|
|
231 |
|
SBA pools |
|
|
|
|
|
|
7 |
|
|
|
|
|
|
|
7 |
|
U.S. Government obligations |
|
|
|
|
|
|
7,095 |
|
|
|
|
|
|
|
7,095 |
|
Municipal securities |
|
|
|
|
|
|
313 |
|
|
|
|
|
|
|
313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
11,426 |
|
|
$ |
|
|
|
$ |
11,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value |
|
|
December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB certificates |
|
$ |
|
|
|
$ |
3,114 |
|
|
$ |
|
|
|
$ |
3,114 |
|
GNMA certificates |
|
|
|
|
|
|
15 |
|
|
|
|
|
|
|
15 |
|
FHLMC certificates |
|
|
|
|
|
|
1,035 |
|
|
|
|
|
|
|
1,035 |
|
FNMA certificates |
|
|
|
|
|
|
2,303 |
|
|
|
|
|
|
|
2,303 |
|
FNR certificates |
|
|
|
|
|
|
263 |
|
|
|
|
|
|
|
263 |
|
SBA pools |
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
8 |
|
Municipal securities |
|
|
|
|
|
|
348 |
|
|
|
|
|
|
|
348 |
|
Equity securities |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
7,087 |
|
|
$ |
|
|
|
$ |
7,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items Measured at Fair Value on a Non-Recurring Basis |
|
|
From time to time, certain assets may be recorded at fair value on a non-recurring basis,
typically as a result of the application of lower of cost or fair value accounting or a
write-down occurring during the period. The only item recorded at fair value on a non-recurring
basis is foreclosed real estate, which is recorded at the lower of cost or fair value less
estimated costs to sell. Fair value is determined by reference to appraisals (performed either
by the Bank or by independent appraisers) on the subject property, using market prices of
similar real estate assets (Level 2 measurements). The Bank held no foreclosed real estate at
December 31, 2010 or December 31, 2009. |
|
|
The Bank is required to evaluate events or transactions that may occur after the balance sheet
date for potential recognition or disclosure in the consolidated financial statements. The Bank
performed such an evaluation through March 21, 2011, the date which the consolidated financial
statements were available to be issued, and noted no such subsequent events. |
16. |
|
Conversion and Stock Offering |
|
|
On September 30, 2010, the Bank completed its conversion from a mutual to a stock form of
organization as a subsidiary of Century Next Financial (the Company), and the Company
completed an initial public offering in which it issued 1,058,000 shares of its common stock for
a total of $10.6 million in gross offering proceeds and $9.8 million in net proceeds. |
57
16. |
|
Conversion and Stock Offering (Continued) |
|
|
In conjunction with the conversion, the Bank established a liquidation account in an amount
equal to the Banks retained earnings contained in the final prospectus. The liquidation
account will be maintained for the benefit of eligible account holders and supplemental eligible
account holders who maintain deposit accounts in the Bank after the conversion. |
|
|
In the event of a complete liquidation (and only in such event), each eligible account holder
and supplemental eligible account holder will be entitled to receive a liquidation distribution
from the liquidation account in the amount of the then current adjusted balance of deposit
accounts held, before any liquidation distribution may be made with respect to common stock.
Except for the payment of dividends by the Bank, the existence of the liquidation account will
not restrict the use or application of such retained earnings. |
|
|
|
Item 9. |
|
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure. |
Not Applicable.
|
|
|
Item 9A. |
|
Controls and Procedures. |
(a) Our management evaluated, with the participation of our President and Chief Executive Officer
and our Senior Vice President and Chief Financial Officer, the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934) as of December 31, 2010. Based on such evaluation, our President and Chief Executive
Officer and our Senior Vice President and Chief Financial Officer have concluded that our
disclosure controls and procedures are designed to ensure that information required to be disclosed
by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the SECs rules and
regulations and are operating in an effective manner.
(b) Managements Report on Internal Control Over Financial Reporting. Management is responsible
for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Exchange Act Rule 13a-15(f). The Companys internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in accordance
with authorizations of management and directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of the Companys assets that could have a material effect on the financial statements.
Internal control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
prepared for external purposes in accordance with generally accepted accounting principles. Because
of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including our principal
executive officer and principal financial officer, we conducted an evaluation of the effectiveness
of our internal control over financial reporting based on the framework in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on our evaluation under the framework in Internal Control Integrated Framework,
management concluded that our internal control over financial reporting was effective as of
December 31, 2010.
This Annual Report does not include an attestation report of the Companys registered public
accounting firm regarding internal control over financial reporting. Managements report was not
subject to attestation by the Companys registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit the Company to provide only
managements report in this Annual Report.
58
(c) No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and
15(d)-15(f) under the Securities Exchange Act of 1934) occurred during the fourth fiscal quarter of
2010 that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
|
|
|
Item 9B. |
|
Other Information. |
Not applicable.
PART III
|
|
|
Item 10. |
|
Directors, Executive Officers and Corporate Governance. |
The information required herein is incorporated by reference from the information contained in
the sections captioned Information with Respect to Nominees for Director, Continuing Directors and
Executive Officers and Beneficial Ownership of Common Stock by Certain Beneficial Owners and
Management Section 16(a) Beneficial Ownership Reporting Compliance in the Companys definitive
proxy statement for the 2011 Annual Meeting of Stockholders to be held in May, 2011 (the Proxy
Statement).
The Company has adopted a Code of Conduct and Ethics that applies to its principal executive
officer and principal financial officer, as well as other officers and employees of the Company and
the Bank. A copy of the Code of Ethics is available on the Companys website at
www.bankruston.com.
|
|
|
Item 11. |
|
Executive Compensation. |
The information required herein is incorporated by reference from the information contained in
the sections captioned Management Compensation in the Proxy Statement.
|
|
|
Item 12. |
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
Security Ownership of Certain Beneficial Owners and Management. The information required
herein is incorporated by reference from the information contained in the section captioned
Beneficial Ownership of Common Stock by Certain Beneficial Owners and Management in the Proxy
Statement.
The Company had no equity compensation plans as of December 31, 2010.
|
|
|
Item 13. |
|
Certain Relationships and Related Transactions, and Director Independence. |
The information required herein is incorporated by reference from the information contained in
the sections captioned Management Compensation Related Party Transactions and Information
with Respect to Nominees for Director, Continuing Directors and Executive Officers in the Proxy
Statement.
|
|
|
Item 14. |
|
Principal Accounting Fees and Services. |
The information required herein is incorporated by reference from the information contained in
the section captioned Ratification of Appointment of Independent Registered Public Accounting Firm
(Proposal Two) Audit Fees in the Proxy Statement.
59
PART IV
|
|
|
Item 15. |
|
Exhibits and Financial Statement Schedules. |
(a)(1) The following financial statements are incorporated by reference from Item 8 hereof:
(2) All schedules are omitted because they are not required or applicable, or the
required information is shown in the consolidated financial statements or the notes thereto.
(3) Exhibits
The following exhibits are filed as part of this Form 10-K and this list includes the Exhibit
Index.
|
|
|
|
|
|
|
|
|
No. |
|
Description |
|
Location |
|
|
3.1 |
|
|
Articles of Incorporation of Century Next Financial Corporation |
|
|
(1 |
) |
|
3.2 |
|
|
Bylaws of Century Next Financial Corporation |
|
|
(1 |
) |
|
4.0 |
|
|
Form of Stock Certificate of Century Next Financial Corporation |
|
|
(1 |
) |
|
10.1 |
|
|
Bank of Ruston Officers Deferred Compensation Plan* |
|
|
(1 |
) |
|
10.2 |
|
|
Bank of Ruston Death Benefit Only Income Continuation Plan* |
|
|
(1 |
) |
|
10.3 |
|
|
Bank of Ruston Directors Indexed Deferred Compensation Plan* |
|
|
(1 |
) |
|
10.4 |
|
|
Bank of Ruston Directors Deferral Income Plan* |
|
|
(1 |
) |
|
21.0 |
|
|
Subsidiaries of the Registrant |
|
Reported in Item 1 |
|
23.0 |
|
|
Consent of Heard McElroy & Vestal, LLP |
|
Filed herewith |
|
31.1 |
|
|
Rule 13(a)-14(a) Certification of the Chief Executive Officer |
|
Filed herewith |
|
31.2 |
|
|
Rule 13(a)-14(a) Certification of the Chief Financial Officer |
|
Filed herewith |
|
32.0 |
|
|
Section 1350 Certification |
|
Filed herewith |
|
|
|
* |
|
Denotes a management contract or compensatory plan or arrangement. |
|
(1) |
|
Incorporated by reference from the like-numbered exhibit
included in Century Next Financials registration statement on Form S-1, filed
June 7, 2010, as amended (SEC File No. 333-167589). |
|
(b) |
|
The exhibits listed under (a)(3) of this Item 15 are filed herewith. |
|
(c) |
|
Reference is made to (a)(2) of this Item 15. |
60
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
|
|
|
|
|
CENTURY NEXT FINANCIAL CORPORATION
|
|
March 29, 2011 |
By: |
/s/ Benjamin L. Denny |
|
|
|
Benjamin L. Denny |
|
|
|
President and Chief Executive Officer |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the capacities and on the
date indicated.
|
|
|
|
|
Name |
|
Title |
|
Date |
/s/ Thomas W. Rogers |
|
|
|
|
|
|
Chairman
of the Board
|
|
March 29, 2011 |
/s/ Benjamin L. Denny |
|
|
|
|
|
|
President and Chief Executive
Officer
|
|
March 29, 2011 |
/s/ G. Randall Allison |
|
|
|
|
|
|
Vice President and Chief Financial
Officer (principal financial and
accounting officer)
|
|
March 29, 2011 |
/s/ J. Brandon Ewing |
|
|
|
|
|
|
Director
|
|
March 29, 2011 |
/s/ William D. Hogan |
|
|
|
|
|
|
Director
|
|
March 29, 2011 |
/s/ Daniel D. Reneau |
|
|
|
|
|
|
Director
|
|
March 29, 2011 |
/s/ Scott R. Thompson |
|
|
|
|
|
|
Director
|
|
March 29, 2011 |
/s/ Dewey C. Thurmon |
|
|
|
|
|
|
Director
|
|
March 29, 2011 |
/s/ Neal Walpole |
|
|
|
|
|
|
Director
|
|
March 29, 2011 |
61